Oil and gas: Discovered small fields – New entrants likely to start production first

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New Delhi | Published: April 11, 2018 4:57:55 AM

While six-seven hydrocarbon areas awarded under the discovered small fields (DSF) policy are expected to start production in 2019, the new entrants, rather than entrenched big players in the sector, are likely to lead the pack.

Oil and gas, oil sector, oil industriesIn March 2017, 31 contracts were signed with 22 companies, of which 15 were new entrants.

While six-seven hydrocarbon areas awarded under the discovered small fields (DSF) policy are expected to start production in 2019, the new entrants, rather than entrenched big players in the sector, are likely to lead the pack. Some small explorers are also finding the fields more productive compared with initial estimates.

The Union Cabinet had in September 2015 approved 69 marginal fields to be offered under the DSF Round I. Of these, 67 DSFs were clubbed into 46 contract areas and put on offer through online international competitive bidding.

In March 2017, 31 contracts were signed with 22 companies, of which 15 were new entrants. Almost one-third of the contracts were won by state-run oil companies.

According to sources, new entrants are more eager to start production as their revenue is tied to it. Under the new regime, operators will have to share revenue with the government unlike the earlier model of production sharing.

Among the contract winners that have reported reserves much higher than earlier estimated is Oilmax Energy, which expects 300% more gas from the Duarmara field in Assam. The company expects 0.5 trillion cubic feet of gas from the field. The explorer has also been awarded the Charaideo field in the north-eastern state. Among the state-run firms, Bharat Petroleum Corp’s arm Bharat PetroResources has been awarded five fields, the highest, Indian Oil Corp won three fields, and Hindustan Petroleum Corp through its upstream arm Prize Petroleum won two fields. Prize Petroleum also got awarded one field in a consortium with Hindustan Oil Exploration Co (HOEC) and Oil India.

Fields offered under the DSF policy were relinquished by ONGC and Oil India. The Cabinet in February 2018 gave a nod for the second round of DSF which is expected to commence later this year.

Some others are also ready to start operations and are waiting for clearances. Nippon Power, a first-time dabbler in the hydrocarbon space, is awaiting clearances from the central environment ministry and the Gujarat Pollution Control Board. The company has been awarded two fields —West Bechraji and Kamboi in Gujarat.

HOEC, a private operator, is also expecting a field it has been awarded in the prolific Bombay High region to hold five times more reserves compared with initial estimates.

Director-general of hydrocarbons Atanu Chakraborty had during a roadshow last month said that while production of oil and gas from the first set of onshore fields under DSF will commence by the end of this year, offshore ones will go onstream by 2020-2021.

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