ONGC puts mature oil, gas fields on block

By: |
November 08, 2020 3:00 PM

The 15-year Production Enhancement Contract (PEC) will require firms to commit to investing in capital and operating expenditure to increase production, higher than the existing baseline output, according to the tender document.

ONGC is understood to have requested the government to consider exempting it from payment of cess, royalties, and profit petroleum until crude prices are less than $45 per barrel.ONGC is understood to have requested the government to consider exempting it from payment of cess, royalties, and profit petroleum until crude prices are less than $45 per barrel.

State-owned ONGC has invited bids from global oil and gas companies for undertaking work to boost production from its ageing fields as it looks to reverse declining output.

The 15-year Production Enhancement Contract (PEC) will require firms to commit to investing in capital and operating expenditure to increase production, higher than the existing baseline output, according to the tender document.

A tariff will be paid in USD per barrel of oil and USD per million British thermal units for gas for any incremental hydrocarbon produced and saved over the baseline. ONGC on October 27, issued the expression of interest (EoI) notice offering 15-year PECs to outside contractors for an unidentified number of “mature” fields.

The company made no mention of oil or gas field names in the EoI notice, but sources said the fields are largely in Assam and Gujarat, the country’s oldest producing basins.

“ONGC intends to undertake production enhancement from its onshore mature fields under ‘Production Enhancement Contract (PEC)’ with suitable oil and gas companies of global repute who have technical expertise, financial capability and resources to increase production by improving the recovery from such fields,” the tender said.

Companies, it said, will be required to commit investment in capital and operating expenditure “to increase production from the existing production by introduction of new technologies.” They will have to do reservoir modelling, reserves assessment and execution of a development plan to enhance production.

All the oil and gas produced will belong to ONGC and anyone interested has until December 1, 2020 to respond.
This is the second attempt by ONGC to induct partners in its ‘mature’ or ageing fields.

On December 28, 2018, it had invited PEC bids for Geleki field in Assam and Kalol in Gujarat. But only Schlumberger responded for Geleki and no bid was received for Kalol. Schlumberger sought deviations which ONGC turned down.
ONGC re-launched the PEC process for Kalol and Geleki with a request for information (RFI) notice on July 22, 2020.

The government has been pushing ONGC to hire international oil service companies to raise output from its mature oil fields as it saw the foreign companies as the answer to declining production from ageing fields. ONGC is looking to raise domestic output quickly to meet Prime Minister Narendra Modi’s target of cutting import dependence by 10 per cent by 2022. India currently imports about 85 per cent of its oil needs.

Originally, ONGC had on December 7, 2016, signed a Summary of Understanding (SoU) to give Kalol field to Halliburton and Geleki field to Schlumberger for raising production above the current baseline output.

Though the contracts were signed in presence of Oil Minister Dharmendra Pradhan, ONGC rescinded them in 2017, on fears of courting controversy for handing fields on nomination basis.

Thereafter, the company in June 2017, floated an expression of interest (EoI) from service providers for undertaking production enhancement. Schlumberger Asia Services, Halliburton Offshore Services Inc and Baker Hughes Singapore PTE Ltd were shortlisted as the firms were meeting pre-qualification criteria.

Bids were originally sought by May 25, 2018, but saw several extensions and final bids came in 2019. At the close of bids, only Schlumberger made a financial bid for Geleki field.

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