ONGC looks for partners to boost output of 64 oilfields3 min read . Updated: 28 Jun 2019, 11:01 PM IST
- ONGC looks for partners to boost output of 64 oilfields
- In 2015, PM Modi set a target of reducing import dependence on crude oil to 67% by 2022
NEW DELHI: State-run Oil and Natural Gas Corporation (ONGC), which accounts for 73% of India’s oil and gas output, has called for bids seeking partners to develop its 64 discovered small and marginal fields.
These so-called marginal fields were awarded to the state-owned firm 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.
“ONGC announces Notice Inviting Offer (NIO) seeking partners for enhancement of oil and gas production from its 64 marginal nomination fields with the intention to maximize recovery from these fields by infusion of new technology," the public sector unit said in a statement on Friday.
The planned auction, reported by Mint on 21 November 2014, comes at a time when the National Democratic Alliance (NDA) government aims 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.
“Companies, either alone or in consortium or joint ventures, may bid for one or more contract areas. The bidders are required to fulfil the requisite technical and financial criteria and the bids would be evaluated on the basis of revenue sharing from the incremental oil and gas production," the statement added.
The contract period will be for 15 years which can be extended by another five years, with the successful bidders allowed completing marketing freedom for sale of oil and gas on arms length basis.
Since India imports over 80% of its crude needs and 18% of natural gas, higher energy prices stoke inflation and hurt the country’s economic growth. The price of the Indian crude basket, which represents the average of Oman, Dubai and Brent crude, has been firming up. Any spike in global crude prices will impact India’s oil import bill and trade deficit. Every dollar increase in the price of oil raises the import bill by around Rs10,700 crore on an annual basis.
“The offer shall allow interested companies to participate in the International Competitive Bidding (ICB) process announced for 17 onshore contract areas comprising of 64 oil and gas producing fields with total in-place O+OEG volume of about 300 MMTOE," the ONGC statement said.
In November 2017, as a production enhancement measure, the Directorate General of Hydrocarbons (DGH), a regulatory body under the ministry of petroleum and natural gas, had proposed to sell 60% stake in the hydrocarbon fields of ONGC and Oil India Ltd (OIL) to private exploration firms. The two firms would retain the rest 40%. The plan was expected to include 15 blocks --11 of ONGC and four of OIL.
The plan, however, failed as ONGC strongly opposed the DGH proposal, countering it with its own proposal that it be allowed to outsource operations on the same terms as the government plan.
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 meet the ever-increasing demand, India will depend on imports in the foreseeable future.
The NDA government has opened up markets to the private sector for retail outlets, implemented the discovered small fields policy, the Hydrocarbon Exploration Licensing Policy and the Open Acreage Licensing Policy and allowed marketing and pricing freedom for gas produced from deep and ultra deep water areas and coal-bed methane fields.