Economy

Oil, gas fields auction date likely to be extended

PTI New Delhi | Updated on January 16, 2018

field

Due to apprehensions over poor response, the government is likely to extend by at least one month the last date of bidding for the auction of 46 small oil and gas fields that were “given-up” by state-owned ONGC and Oil India.

Bidding for the auction, the first in over four years, is to close on October 31.

There are apprehensions over response after prospective bidders complained about the quality and amount of data being made available on the fields that have been put on offer, sources privy to the development said.

For bidders to make decisions, more data particularly about the size of reserves is required, and making that available would require extending the deadline, they said.

Also, some prospective bidders have raised concerns about the size of the blocks or fields on offer. They say 10 square kilometer offering, one-tenth of the smallest block ever offered in the previous bid rounds, is too small.

The sources said the bidders feel the block area has to be larger to give them room for probing oil and gas reserves.

After holding roadshows in India and abroad, DGH, the Oil Ministry’s technical arm, will on October 19 hold an “outreach” even on the Discovered Small Fields Bid Round 2016 in the national capital.

A ‘Bidder Facilitation Workshop’ is planned at the event to “resolve queries of the bidders”, they said adding that the extension of the bid deadline may be announced there.

The auction, which was announced on May 25, is to be conducted on simpler contractual terms together with pricing and marketing freedom.

India had liberalised its exploration and production regime almost two decades ago when in early 1990s it auctioned about 28 fields to private and public investors.

In late 1990s, the country had further liberalised its E&P sector with the introduction of New Exploration Licensing Regime (NELP) regime that allowed 100 per cent FDI and offered a level playing field to private and national oil companies.

NELP was based on Production Sharing Contract (PSC) that meant sharing of revenues with the government post recovery of cost by contractor. This regime was marred by disputes over cost recovery and regulatory inflexibility.

Now the bid round is being held under a new regime that will offer discovered fields to those who offer the maximum share of oil and gas to the government.

The fields on offer hold an estimated 625 million barrels of in-place oil and gas reserves.

The sources said the 46 fields that are offered are actually 67 small and marginal discoveries that have been clubbed.

Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL) “surrendered” these as they could not develop them because of huge overhead cost and uneconomic size.

Last exploration licensing round concluded in March 2012. That was the ninth round of bidding under NELP. About 256 blocks were awarded in the nine rounds of NELP.

Published on October 11, 2016

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