The Hindu Business Line : 16 cos ready to service ONGC's marginal fields

Monetising discoveries
High crude prices make it prudent to exploit these fields.
Marginal fields have low oil and gas reserves, which are economically viable when produced with low capital cost and overheads.

New Delhi , April 5

To encash on the volatile crude market coupled with the rising demand for oil and gas, 16 companies have responded to the tenders floated by the Oil and Natural Gas Corporation (ONGC) for service contracts for its 19 offshore marginal fields. According to a senior ONGC executive, these fields with proven reserves would be given on service contracts only. The current scenario has made it economical for exploiting the marginal fields, the executive said.

ONGC has 96 marginal fields, which hold 200 million tonnes of oil and 120 billion cubic metre of gas. These fields have been discovered, but not monetised, that is, the discovered fields have not been exploited, the official told Business Line. Now with high crude prices it would be economically prudent to exploit these fields, he added.

For offshore, there are 53 fields, of which 19 are now being tendered. The company had floated the tenders last year. The fields are to be awarded in the next few weeks, the executive said. Though the ONGC executive declined to name these companies, indications are that apart from the small domestic companies some international players have also envisaged interest in the fields.

Marginal fields

Explaining why ONGC itself was not monetising these fields, the executive said, "Developing small fields for a company of ONGC's size is an expensive proposition, because it can depute its high-value professionals to the larger fields. A leaner and focused private firm can do the job much cheaper."

Marginal fields have low oil and gas reserves, which are economically viable when produced with low capital cost and overheads. This is best possible when outsourced to smaller companies. Over the years, ONGC has discovered several marginal fields both onshore and offshore.

The marginal fields throughout the world contribute around 40 per cent of total oil production. With the changing world oil price scenario, innovative technologies and liberal Government regulations and taxes, the development of marginal fields has become profitable, he added. These fields are scattered across Rajasthan, Assam, Cauvery Basin, and Krishna-Godavari. Gas is mostly available in Rajasthan, Assam, Krishna-Godavari, and Cauvery sediments.

Onshore contracts

In the onshore fields in Gujarat and Assam, contracts were finalised for eight fields and work is under progress, he said. The company has awarded in Assam three onshore fields to Assam Company Ltd, while three fields in Gujarat have been awarded to Prize Petroleum and two fields to GSPCL. ONGC retains full ownership of these fields as well as the production of oil and gas from these fields.