The government plans to auction 69 small and marginal oil and gas fields to private firms on a new revenue sharing model, Oil Minister Dharmendra Pradhan said today.
As many as 63 discovered oil and gas are being surrendered by Oil and Natural Gas Corp (ONGC) as they were found to be uneconomic for a large firm with huge overheads to develop or bring to production. Smaller firms with a fraction of operating cost can develop them at much faster and economic rate.
Oil India Ltd (OIL) has surrendered 6 marginal fields.
“We are looking at marginal field auction round on a new revenue sharing model soon,” Pradhan said on the sidelines of Geo India 2015 conference here.
Under the revenue sharing model, bidders will have to upfront state how much oil and gas they will share with the government. The firm offering maximum win the right to explore and produce from the field.
This is a shift from the much—criticised Production Sharing Contract (PSC) regime where blocks were allocated to firms that bid highest amount of work in the area.
It allowed the firms to recover all their cost before sharing profits with the government, a regime which was criticised by CAG as one that provides incentive to operators to keep raising cost so as to postpone government share.
“We are looking at a regime which is mutually beneficial to both government and companies,” Pradhan said.
“We are working on fast track for the auction of marginal fields,” he said adding the round is likely in next few months.
His ministry is currently preparing the policy guidelines for the auction, and if the Cabinet Committee on Economic Affairs (CCEA) approves, it would mark shift to the new bidding regime as was recommended by the C Rangarajan Committee.
Pradhan said the policy regime for the 10th exploration licensing round is under discussion.
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