Govt to auction 69 marginal oilfields.
THE government plans to auction 69 small and marginal oil and gasfields to private firms on a new revenue sharing model. As many as 63 discovered oil and gas fields are being surrendered by the Oil and Natural Gas Corporation as they were found to be uneconomical for a large firm with huge overheads to bring into production.
Smaller firms with a fraction of operating cost are better suited to develop these fields.
On the sidelines of Geo India 2015 conference here on Sunday, oil minister Dharmendra Pradhan said, " We are looking at marginal field auction round on a new revenue sharing model soon." Similarly, Oil India Limited ( Oil) has surrendered six marginal fields.
Under the revenue sharing model, bidders will have to up front state how much oil and gas they will share with the government.
The firm offering the maximum quantity to the government will be awarded the field. This marks a shift from the production sharing contract regime, under which blocks were allocated to firms that bid highest amount of work in the area. The model allowed firms to recover all their cost before sharing profits with the government, a regime which was criticised by the Comptroller and Auditor General as one that provides incentive to operators to keep raising cost and deprive the government of its share.
" We are looking at a regime which is mutually beneficial to both government and companies," Pradhan said. " We are working on fast track for auction of marginal fields," he said adding the round is likely in next few months. The petroleum ministry is preparing policy guidelines for the auction which will be then put up for approval of the Cabinet Committee on Economic Affairs. ONGC holds about 165 marginal fields ( 79 offshore and 86 onshore). These marginal fields were given to ONGC on a nomination basis before the licensing rounds began. Hydrocarbons resources are locked up in these fields, but they cannot be produced economically on a standalone basis or with a conventional approach.
Oil minister Dharmendra Pradhan.
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