Mumbai/New Delhi: Directorate General of Hydrocarbons (DGH) may be rethinking its plan to sell 60% stake in hydrocarbon blocks held by Oil and Natural Gas Corp. Ltd (ONGC) and Oil India Ltd (OIL), two people familiar with the development said.
Last November, as a production enhancement measure, DGH had proposed to sell a 60% stake in the hydrocarbon fields of ONGC and OIL to private exploration firms. The two firms would retain the rest 40%. The plan included 15 blocks—11 of ONGC and four of OIL.
ONGC officials have been protesting against the idea.
“We have written a detailed mail to the DGH providing data to them concerning the fields in question. We have asked them why is there a proposal and need to give 60% in these fields to private players as we have been producing from these fields for last three decades. We have been given to understand that the DGH is re-thinking on the plan," said an ONGC official, one of the two cited above, on condition of anonymity.
The official added that if such a sale takes place, operational control of the fields would go to private firms.
Mails sent to ONGC and the DGH on 15 February remained unanswered.
“At the moment, there is no policy on selling ONGC assets to private players. Every national government considers strategies to enhance production from time to time. However, there is no plan to sell ONGC assets to private players on the anvil," said the second person mentioned above, a DGH official, who too spoke on the condition of anonymity.
In a letter to PM Narendra Modi on 23 November 2017, the Association of Scientific and Technical Officers (ASTO) of ONGC said the oil and gas fields in question have been discovered, developed and operated by ONGC for 30 years, and that the decision to sell stake in them may have lasting consequences on the health and future growth of ONGC.
“After 30 years of production, output from these fields will naturally show a dip from peak levels and, thus, cannot be termed under-performers," ASTO’s president (central working committee), Sanjay Goel had written in the letter.
According to the ONGC official mentioned above, the fields shortlisted by DGH include some of its prolific blocks—Kalol, Ankleshwar, Gandhar, Santhal, Jhalora, Sagara, Vasna, Padra, Rudrasagar and Bhuvanagiri. Most of these are in Gujarat.
ONGC has lined up investments of around $11 billion to raise its gas production by nearly 30% over the next three-four years.
The idea of farming out stakes in ONGC and Oil India’s fields stem from the fact that the government aims to cut oil imports by 10% by 2022. This could be achieved through enhanced hydrocarbon output by domestic companies both public and private.
Since consumption of fossil fuels has been increasing in line with the economic growth rate, the government has been exploring ways to develop markets for alternative fuels including methanol, as well as to create an ecosystem for electric mobility. It has often spoke of India moving to an all-electric fleet by 2030.
State-backed Energy Efficiency Services Ltd is now in the process of bulk procurement of electric vehicles that could help bring down prices. Reducing fossil fuel consumption is a priority for the Modi administration as it helps in insulating the economy from oil price shocks and in meeting climate change targets.