‘New auction methodologies to boost hydrocarbon production’

Our Bureau New Delhi | Updated on February 19, 2019 Published on February 19, 2019

The Cabinet has approved a revised methodology for auction and allocation of hydrocarbon resources.

Finance Minister, Arun Jaitley, said, “The Cabinet has approved new terms and conditions for auction of oil and gas resources in the country. The focus is on increasing the production from existing resources.”

“The first category to be auctioned is blocks that are already explored fields. During bid evaluation, the weightage criteria for bidding under this category was 50:50 between minimum work proposed (thereby higher production) and revenue shared with the government. This has now been revised to 70:30 with higher weightage for minimum work programme.”

“The second and third category is of those blocks where little or exploration has been done. These blocks can be bid out without any revenue share commitment and the government will seek a share in the eventuality of a windfall gain,” he said.

Jaitley said this is in line with the recommendations of a high-level Inter-Ministerial Committee. The Committee was headed by Rajiv Kumar, Vice-Chairman, NITI Aayog.

The scheme puts on offer some existing fields owned by public sector undertakings and incentivises ONGC for improving enhanced oil recovery from its existing fields.

Coal mines allocation

The Cabinet Committee on Economic Affairs has also approved a new methodology in the coal sector. This will allow the allocation of coal mines for specified end-use or own consumption, to sell 25 per cent of actual production on Run-of-Mine (ROM) basis in the open market with payment of additional premium on such sale.

The decision was taken to encourage more production of coal from auctioned coal blocks.

It is expected to increase competitiveness and make future tranches of auction/allocation attractive and commercially viable leading to higher revenues for the government. This will also address the issue of lack of response from bidders during earlier tranches of auction, an official statement said.

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Published on February 19, 2019
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