New Delhi/Mumbai: India plans to offer stakes of up to 60% in oil and gas fields owned by state energy companies that are already under production to private firms, said five people in government and companies with knowledge of the matter.

The government is making the decision after failing to draw investment from global oil majors in new fields. The plan would boost India’s domestic oil and gas output and would meet Prime Minister Narendra Modi’s target to reduce oil imports by 10% by 2022. However, the plan could reduce profits of state-owned companies.

India is the world’s third-largest crude importer, buying 80% of its supplies from overseas.

The sales plan would affect so-called “nomination blocks" or fields handed to state-owned Oil and Natural Gas Corp. (ONGC) and Oil India Ltd. The fields are located both onshore and offshore, according to people in the know.

The Directorate General of Hydrocarbon (DGH), a unit of the oil ministry, has suggested these state companies form joint ventures with private firms including foreign majors that have long eyed these fields, the people said.

The Cabinet could accept the new policy by December, said a government official.

The DGH has also proposed the state-owned companies enact technical tie-ups with private firms, offering to give them an assured rate of return if the output increases beyond a certain level, the five people said. Reuters