New Delhi: As part of the National Democratic Alliance (NDA) government’s strategy of reducing import dependence, state run Oil India Ltd (OIL) has called for bids seeking partners for its two discovered marginal fields in Assam and Rajasthan to enhance production.
The OIL’s call for bids follows state run Oil and Natural Gas Corporation’ (ONGC) tender seeking partners for its 64 discovered small and marginal fields to enhance production on Friday. The last date for submitting bids for OIL’s Digboi and Baggitibba fields is 20 December.
The total in place hydrocarbon volume of the two fields is of the order of 49 MMTOE.
The offer would provide an opportunity to oil and gas service providers and operators to partner with OIL on a revenue sharing model. However, the Petroleum Mining Lease and Ownership of the fields will remain with OIL. The new technology partner will infuse new and appropriate fit for purpose technology to increase the production," OIL said in a statement on Saturday.
These so-called marginal fields were awarded to the state-owned firms on a nomination basis but remained undeveloped because they lie in tough terrain or had low reserves. In January this year, the government asked state-owned explorers to rope in the private sector to raise production to better exploit its hydrocarbon resources and cut dependence on foreign oil.
These call for bids by Indian state run firms comes in the backdrop of tightening US sanctions on Iran, and production curbs by the Organization of the Petroleum Exporting Countries (Opec) and Russia. The Monday meeting of Opec in Vienna is expected to decide on continuing with the production curbs even as the tensions in Persian Gulf escalate.
With Opec accounting for around 40% of global production, any decision will have a wide-ranging impact on energy markets. The decision of the Saudi Arabia led cartel will have a bearing on India, the world’s third largest oil importer. India’s energy needs are mainly met through imports, and Opec accounts for around 83% of the country’s total crude oil imports.
The planned auction by ONGC and OIL, reported by Mint on 21 November 2014, comes at a time when the government plans to increase domestic production to reduce import dependence to buffer its consumers from the spike in global prices. The plan aims to leverage the expertise of private and foreign firms to grow domestic production and help meet India’s demand for energy. Between 2013 and 2017, India’s demand for petroleum products grew at a compound annual growth rate of 5.5%. In March 2015, Prime Minister Narendra Modi set a target of reducing import dependence on crude oil by 10 percentage points to 67% by 2022.
Opec expects global demand to surge 33%, or 91 million barrels oil equivalent per day (mboed), between 2015 and 2040. Of this, 24%, or a 22 mboed jump, is expected from India. With domestic production unable to cater to the ever-increasing demand, India will depend on imports in the foreseeable future.