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Monday will be a litmus test for Oil Minister Dharmendra Pradhan and his team as the Discovered Small Fields Bid Round 2016 (DSF) takes place.
DSF auctions are seen as the stepping stone towards the upcoming Open Acreage Licensing Policy (OALP) – that gives an option to a company to select the exploration blocks on its own, without waiting for the formal bid round from the government.
Pradhan and his team will be under scrutiny by all those associated with oil and gas exploration business, as both the viability of the fields and the timing — low global oil prices and demonetisation constraining the bidders’ purse strings — are under question.
Though big players such as BP, Reliance Industries, and Shell are still silent, medium and small-sized players have shown interest in DFS, an official said. While ONGC and Oil India Ltd have not disclosed their strategy, sources in the know said, “If ONGC bids, it will be only for select areas.”
However, Essar, HOECand Cairn India have also shown interest.
“Let’s not forget these are fields that were given to ONGC and Oil India Ltd prior to the licensing rounds on nomination basis. The fields do come with a baggage — the national oil companies were unable to develop them for reasons including an unconducive fiscal regime — hence the government had taken them back and decided to auction them,” an official of a private sector exploration company said.
However, the government has done its best to create a positive environment. The offering has been made under a new fiscal regime – revenue sharing model, and there is also pricing and marketing freedom to the contractors.DFS is under a unified licensing policy that allows a contractor to explore any resource – oil, gas, shale etc.
The government is enthused by the response during the road shows and expects the actual bids to outnumber the documents that were bought.
On offer are 67 fields in 46 contract areas across nine sedimentary basins estimated to hold over 625 million barrels of oil and oil equivalent gas in-place, spread over 1,500 sq km in onland, shallow water and deepwater areas.
Besides, the removal of past experience criteria as pre-qualification measure has attracted many players from non-E&P and non-oil and gas sector.
The Directorate-General of Hydrocarbon is expected to disclose the bids received on Monday, but the final results will be declared only after 10-12 days after the due diligence is completed.
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