After a gap of over six years India once again awarded oil and gas blocks, but with a difference. This time it has awarded already discovered areas which were owned by public sector companies — ONGC and Oil India.
Thirty-one contracts were signed on Monday with 22 companies of which 15 were new entrants in the business. The government estimates total revenue of ₹46,400 crore from these contract areas.
The government expects the fields to generate gross royalty collection and state royalty collection of around ₹5,000 crore and ₹2,100 crore respectively. It expects revenue share of ₹9,300 crore.
Speaking at the event, Dharmendra Pradhan, Minister of State (Independent Charge) for Petroleum & Natural Gas, said the Discovered Small Field Bid Round was conceptualised when crude price was at $40 a barrel levels, today predictions are that crude will be $55/bbl to $60/bbl.
“Those who took the risk will be rewarded,” he said.
Under the Discovered Small Field Bid Round 2016, there are 17 Indian private companies and only one foreign private company. BPRL, PFH Oil and Gas, Oil Max Energy, Nippon Power, Prize Petroleum and Hindustan Oil Exploration among others signed the contracts. In all, there are 15 are new entrants to the exploration and production industry.
The Minister also urged ONGC and Cairn India to raise their performance. Pradhan reiterated Prime Minster Narendra Modi’s call for a 10 per cent reduction in imports by 2022. He added that the country’s fuel consumption is growing but there is a limit to the domestic reserves. Pradhan said the government is working to incentivise oil production through advanced techniques.
He said, “The government is devising the frameworks for Production Enhancement Contracts and incentives for Enhanced Oil Recovery.”
The Parliamentary Standing Committee on Petroleum and Natural Gas in its 18th report noted that there is a need to start production from all available sources of oil and gas in the country at the earliest. The committee has also recommended that the remaining contract areas should also be put under bid again in order to fast track monetising of these resources.
Under the Discovered Small Fields auctions, the contractors have been given marketing and production freedom. In fact, so enthused is the government with the response that it is already talking about next rounds.