First round of bidding for marginaloil and gas fields set for mid-July

The Centre on Wednesday announced the auction of 67 discovered small oil and gas fields, holding about ₹70,000 crore worth of hydrocarbon reserves.

The first round of bidding for fields will start from July 15 and end on October 31. 

Dharmendra Pradhan, Minister of State (Independent Charge) for Petroleum and Natural Gas, said the Ministry will aim to complete the contract-signing and award of the fields by January. 

Sixty-seven fields clubbed into 46 contract areas will be on offer. The fields were previously owned by ONGC and Oil India, Pradhan said. The Ministry expects production to begin within three to six years of the award of the fields.

“I expect that production will start within three years for the onshore fields and six years for the deepwater offshore fields. There is also a provision for relinquishment of the fields,” Pradhan said.

The two companies could not develop the fields because of the small size and unattractive pricing. 

“Even if they were offered revenue sharing contract, marketing and pricing freedom, which is being offered to the bidders, ONGC and Oil India may not have been able to develop these fields,” said Pradhan, Already 130 wells have been dug in these fields and they have 48 million tonnes of in-place oil reserves as well as 38 billion cubic meters of in-place gas reserves. Of the total, 46 are contract areas, 26 are on land, 18 are in shallow areas and two in deepwater areas.

Pradhan said that roadshows for the bidding round will begin on June 6 in Mumbai. “To attract and encourage start up companies in the hydrocarbon exploration and production business, we will also host a roadshow in Bengaluru and keeping in mind our focus on developing eastern India, we will have a roadshow in Guwahati,” the Minister said. 

The discovered small fields will be bid on the basis of an electronic auction to be held on public sector MSTC Ltd’s web portal. The portal was also launched on Wednesday.

The features of the ‘Discovered Small Fields Bid Round’ are similar to the recently announced Hydrocarbon Exploration Licensing Policy. Winning bidders for the fields will get marketing and pricing freedom to sell crude oil and natural gas from these fields. 

The bidders will be awarded the fields on a revenue sharing contract. The Government’s share of revenue in crude oil will be calculated on the basis of the Indian Crude Basket or actual selling price, whichever is higher. For natural gas, the minimum price for calculating the government’s revenue share will be the prevailing domestic natural gas price.