Auction dates for oil & gas fields announced
Minister of Petroleum and Natural Gas Dharmendra Pradhan, launched the auction of 67 marginal oil and gas discoveries clubbed into 46 fields. It's an effort of the government to decrease India's dependancy on oil imports by 10% in 2022. Starting 6 June, the Petroleum ministry is set to hold roadshows in India and overseas. These discoveries comprise of 36 offshore and 31 onshore fields.
What are marginal oil fields?
A marginal oil field/well is an oil or gas well that is nearing the end of its economically useful life. Marginal wells are also known as stripper wells.
Which oil fields are up for auction?
Out of the 67 discoveries, 28 discoveries are in Mumbai offshore and another 14 are in the prolific Krishna Godavari basin. As many as 10 discoveries are in the Assam shelf. The biggest discovery among the oil fields is the D-18 in Mumbai Offshore. Among the gas discoveries, the largest one is ONGC's B-9 find in the offshore Kutch basin.
Procedure of the Auction
Domestic and international roadshows for the auction will begin on 6 June. The e-bidding will commence on 15 July with a deadline of 31 October. Bids will be finalised by mid-November and contracts signed by January 2017. The fields, initally owned by ONGC and Oil India, were given up due to small size and unattractive pricing. However, they too can bid for the fields.
Regulations re-written by Modi government
Apart from experienced companies, start-ups and lesser-experienced firms too are allowed to bid for the discovered fields. Potential operators will have the freedom to sell crude oil or natural gas to any customer at 'market-determined prices' involving no government interference. Fields will be awarded to bidders on revenue-sharing contracts as opposed to the former PSC regime. The contracts will be 20 years long.
What are production sharing contracts (PSC)?
Production-sharing contracts are contracts by which oil and gas blocks are awarded to those firms which show they will do maximum work on a block. It allows operators to recover all investments before profits are shared with the government.
A change in policy
This auction will be the first licensing round in over four years. Policies have called for a shift from the controversial production-sharing contract to a revenue-sharing regime where bidders will have to quote the revenue they will share with the government. A single license for exploration and exploitation of conventional and non-conventional hydrocarbons will be issued. No cess will be charged on crude oil.
