With global oil giants staying shy of India in past, the government has tweaked terms to attract mainly medium-sized players for the auction of nearly four dozen small oil and gas fields in the first sale in six years.
Bidding for 46 already discovered but untapped smaller oil and gas fields will open on July 15 as the government looks to boost domestic output to cut the import dependence.
The government has abandoned decades-old regime of awarding oil and gas fields under a production-sharing contract (PSC) and instead discovered marginal fields have been offered under a revenue-sharing model, Director General of Hydrocarbons Atanu Chakraborty told PTI here.
Under the new regime, fields will be awarded to companies offering the maximum quantity of oil and gas to the government. Moving away from PSC regime would mean minimal regulatory oversight.
“There couldn’t have been a better time to invest. Oil prices are picking up and Indian energy consumption is galloping. And these are the two things an investor wants – right price and consumers for what they produce,” he said.
He said unlike rest of the world, there is no longer a scenario of over-capacity in India and demand is no longer an issue.
“Most of the ingredients are in place – India offers large demand which takes care of the revenue risk. The investment risk is taken care by the offer of discovered fields where getting into production phase will take small time and cash cycle is small.
“Also, country risk is low and cost of capital is likely to be low. Lastly, contractual regime offered provides stability and non-discriminatory regulatory oversight,” he said.
Unlike exploration rounds previously held, there will will be little risk of unknown as there already are established reserves.
“We are hoping to get small to medium sized players who can quickly develop these reserves,” he said.
Last date of bidding is October 31 and results would be out on November 16.
As many as 69 discovered small and marginal fields were surrendered by state-owned exploration and production companies ONGC and Oil India. 63 of them were surrendered by Oil and Natural Gas Corp (ONGC) as they were found to be uneconomical for a large company with huge overheads to produce at regulated price.
Of these 67 have been clubbed into 46 blocks, holding proven reserves of up to 625 million barrels of oil and gas equivalent. 26 of them are on land, 18 offshore in shallow water and two in deep water.
The bid round offers pricing and marketing freedom.
Under a revenue-sharing model, the companies starts payment to the government as soon as production starts. In the PSC model, they were recover costs fully before sharing revenue with the government.