It wanted ONGC to bring in global players in gas-rich block KG-DWN-98/2 where output is slated to rise sharply by next year, and the recently brought into production Ashokenagar block in West Bengal. Also identified for the purpose is the Deendayal block in the KG basin which the firm had bought from Gujarat government firm GSPC a couple of years back.
The ministry also wants the company to explore creating separate entities for drilling, well services, logging, workover services and data processing entities.
This is the third attempt by the oil ministry to get ONGC to privatise its oil and gas fields under the Modi government.
In October 2017, the Directorate General of Hydrocarbons, the ministry's technical arm, had identified 15 producing fields with a collective reserve of 791.2 million tonnes of crude oil and 333.46 billion cubic metres of gas, for handing over to private firms in the hope that they would improve upon the baseline estimate and its extraction.
A year later, as many as 149 small and marginal fields of ONGC were identified for private and foreign companies on the grounds that the state-owned firm should focus only on big ones.
The first plan couldn't go through because of strong opposition from ONGC, sources aware of the matter said.
The second plan went up to the Cabinet, which on February 19, 2019, decided to bid out 64 marginal fields of ONGC. But, that tender got a tepid response, they said adding that ONGC was allowed to retain 49 fields on condition that their performance will be strictly monitored for three years.
The ministry note of April 1, 2021, said two years have elapsed since the Cabinet decision and non-performing fields need to be identified for divestment and privatisation.
It suggested market-friendly bid terms such as lower royalty rates and complete marketing and pricing freedom.
For medium-sized producing fields, the action plan wanted ONGC to identify maturing fields such as Panna-Mukta, Ratna and R-Series in western offshore and Gandhar in Gujarat as well as fields such as Daman in western offshore which had upcoming development plans, for stake sale.
It also wanted ONGC to consider developing new business models for monetisation of stranded assets/discoveries such as design, finance, built and operate as well as annuity and securitsation based models for development. Fields such as GK-28/42 and all unmonetised discoveries, either individually or as a bouquet, were identified for the purpose, the document showed.
The note said that to reduce dependence on import of crude oil and gas, the ministry has set the domestic production target of 40 million tonnes of crude oil and 50 billion cubic metres (bcm) of natural gas by 2023-24. The bulk of the targeted domestic production for 2023-24 is expected to come from ONGC, which is required to contribute 70 per cent of the domestic production (28 million tonnes of oil and 35 bcm of gas by 2023-24).
It said the share of ONGC contribution in the oil and gas consumption of the country is decreasing continuously as its production is stagnant or decreasing for a long time. As a result import dependency is increasing.
ONGC produced 20.2 million tonnes of crude oil in the fiscal year ending March 31 (2020-21), down from 20.6 million tonnes in the previous year and 21.1 million tonnes in 2018-19.
It produced 21.87 bcm of gas in 2020-21, down from 23.74 bcm in the previous year and 24.67 bcm in 2018-19.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.