Petroleum Ministry to re-auction Ratna and R-series oilfields

Essar Oil may have to compete with other petroleum majors if it wants to get the Ratna and R-Series oilfields near Mumbai. The Ministry of Petroleum and Natural Gas plans to auction the fields once again.

“The Cabinet note is being prepared now. Essar was awarded the block nearly two decades (almost 18 years) back, but no production sharing contract was signed because of differences over royalty and cess. The financial terms relevant then are no longer valid today. Therefore, fresh bids seem to be a logical step,” said a senior Petroleum Ministry official.

The Ratna and R-Series oilfields were allotted before the oil and gas auction rounds were introduced.

The blocks are located in the Ratnagiri shelf, south-west of Mumbai, in the prolific Mumbai offshore basin, which also includes the Bombay High.

There was a controversy around the oilfields recently when the Aam Aadmi Party (AAP) alleged that the Ministry’s Cabinet note on the oil block contract favoured Essar. The oilfields were awarded to the private oil company in 1996. The area is reported to have proven resources of about 900 million barrels.

The formal signing of the contract has been hanging fire over the issue of what royalty and cess the Essar Oil-led consortium (ONGC-Premier Oil) is to be charged — the ones existing at the time of award in 1996 or the rates prevailing today.

AAP had alleged that Petroleum Minister M Veerappa Moily was overruling the opinion of the Cabinet Secretary, the Finance Ministry, the Petroleum Secretary, the Planning Commission and the earlier opinion of the Law Ministry and wanted the contract to be signed with Essar based on the previous terms.

An official panel looking into the issue had recommended that the block either be re-auctioned or given back to ONGC, as the production sharing contract had not yet been signed.

Reacting to the AAP’s allegations, Essar had said it was awarded the Ratna R-Series block in an open and transparent manner, through a bidding process. It was not aware of any internal notes or Ministry documents on the matter.