Cabinet clears award of 31 contracts for discovered small fields

By: |
New Delhi | Published: February 16, 2017 7:31:17 AM

The government on Wednesday set the ball rolling to operationalise the much-awaited discovered small fields (DSFs) as the Cabinet Committee on Economic Affairs (CCEA) approved awarding 31 contract areas which will complement the country’s domestic fuel production and help in achieving energy security.

According to a government release, a total of 134 e-bids were received for 34 contract areas. A total of 47 companies submitted bids, of which 43 were Indian companies and rest foreign firms According to a government release, a total of 134 e-bids were received for 34 contract areas. A total of 47 companies submitted bids, of which 43 were Indian companies and rest foreign firms

The government on Wednesday set the ball rolling to operationalise the much-awaited discovered small fields (DSFs) as the Cabinet Committee on Economic Affairs (CCEA) approved awarding 31 contract areas which will complement the country’s domestic fuel production and help in achieving energy security.

According to a government release, a total of 134 e-bids were received for 34 contract areas. A total of 47 companies submitted bids, of which 43 were Indian companies and rest foreign firms

The Cabinet had in September 2015approved 69 marginal fields to be offered under the DSF policy. Out of which, 67 DSFs were clubbed into 46 contract areas and put on offer through online international competitive bidding.

On January 31, FE had reported that the DSF field awards will be announced within a fortnight.

Out of the 31 contract areas, 23 are onshore and 8 are offshore. These fields were discovered by Oil and Natural Gas Corporation and Oil India but could not be explored due to various hurdles reasons such as isolated locations, small size of reserves, high development costs, technological constraints and fiscal regime, among others.

However, the government put up these fields under the revenue-sharing model to incentivise explorers wherein bidders had been asked to quote the revenue they will share with the government at low and high-end of price and production band.

Some of the winners include Bharat PetroResources, Indian Oil Corporation, Sun Petrochemicals, Adani Welspun Exploration, Hindustan Oil Exploration Company, South Asia Consultancy and Nippon Power.

The fields are expected to to yield 40 million tonnes of oil and 22 billion cubic metre of gas over a period of 15 years. The contract awards come at a time when the Narendra Modi government is focusing to reduce its hydrocarbon imports by 10% by 2022 by enhancing domestic production, increasing fuel efficiency and using alternative energy. India currently imports 70-75% of its energy requirements.

As reported by FE earlier, the winners of round 1 are expected to be closed by March-end and the paperwork for the second round of auction of DSFs is underway too as technicalities are being worked out

A discovered field is one whose reserve position is known and winning bidders will be able to move to the development stage directly without spending time and funds on exploration. The pre-determined fixed timelines to commence production are three years for onshore, four years for shallow-water and six years for deep-water fields.

Do you know What is Wholesale Price Index (WPI), Public Debt, Finance Commission Grants & Other Transfers, Economic Survey, State Finance Commission? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.