1. Oil & gas field auctions: ONGC, OIL retreat paves way for startups, new players

Oil & gas field auctions: ONGC, OIL retreat paves way for startups, new players

Paving the way for start-up firms and new players with little experience in operating hydrocarbon blocks, the country’s two public sector explorers — ONGC and Oil India — have decided to stay away from the ongoing auctions of the 67 discovered marginal oil and gas fields.

By: | Published: October 6, 2016 6:35 AM
ongc, oil india, ongc oil india pull out of auction Although the policy put in place for the auction does not bar any company from bidding, sources confirmed to FE that ONGC and OIL would not take part in the bidding to make it easier for the smaller firms to claim the assets.

Paving the way for start-up firms and new players with little experience in operating hydrocarbon blocks, the country’s two public sector explorers — ONGC and Oil  India — have decided to stay away from the ongoing auctions of the 67 discovered marginal oil and gas fields. The auction would close on October 30 and the fields are likely to be awarded as early as January next year.

Although the policy put in place for the auction does not bar any company from bidding, sources confirmed to FE that ONGC and OIL would not take part in the bidding to make it easier for the smaller firms to claim the assets.

Proven reserves in these fields are estimated to be 88 million tonnes of oil equivalent worth over R77,000 crore at current crude oil price of $45 per barrel. Production of hydrocarbon from these fields would help India cut down imports to the tune of R3,500 crore annually,
petroleum minister Dharmendra Pradhan had said.

“There are several investors (who do not own blocks) who are keen to buy stake in hydrocarbon blocks and this is the best opportunity for them. Moreover, marginal fields give the chance to various services provider firms to take up these blocks that are small and discovered, particularly the onshore ones,” said a chief executive of a private sector explorer. The company is evaluating data for 20 blocks — 12 onshore and 8 offshore.

Pradhan has addressed roadshows across the US, the UK, Singapore and West Asia, apprising them of the government’s efforts to improve the ‘ease of doing business.’
Sources told FE that more than dozen firms engaged in the oil and gas services sector have purchased the geological data for the blocks and are likely to bid. The absence of giants such as ONGC and OIL would make it possible for smaller players to bid as operators.

During the industry interactions between the petroleum ministry, Directorate General of Hydrocarbons (DGH) and companies, several players have pointed out that the fields are smaller in size and volume of hydrocarbon present for big players to bet their stakes.

Unlike the areas auctioned under the New Exploration Licensing Policy adopted by India in 1999, the 67 fields to be auctioned are “discovered” ones, meaning the reserve position is known. The operators could therefore proceed to the development stage straight away without spending time and funds on exploration. The government has determined fixed timelines to commence production from these fields — three years for onshore, four years for shallow water and six years for deep water fields.

  1. B
    BKSEDANI
    Oct 6, 2016 at 8:48 am
    Government has to give the winners clear way of evacuation of the produce. Also way to dispose the effluents and produce water. This is going to be costly affair in the present need of environmental requirements by state and central agencies. Also reliability of test data of Reservoirs is /may be not dependable, it has to be repeated involving large expenditures. Bidders are likely to ume as disposal of fields AS IS AND WHAT, WHERE BASIS like of ss.
    Reply
    1. K
      Kanchan Kumar
      Oct 8, 2016 at 1:26 am
      Oil exploration industry is a capital intensive. Any discovery is out come of continued efforts and huge expenditure. Exploration company should be rewarded.
      Reply
      1. K
        Kanchan Kumar
        Oct 7, 2016 at 4:30 am
        These fields were discovered by National Oil Companies (ONGC and OIL INDIA) after spending significant amount on seismic surveys, exploratory well drilling and appraisal.These companies should be compensated for the value of discovered fields. It may be in the form of partiting interest or signature bonus.
        Reply

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