Starting this July 15, the Centre will start the global bidding process for 67 discovered small oil and gas fields across the country which have been lying undeveloped for many years. At least 12 such fields have been identified in Assam which too would go under the hammer during the process.
These 12 fields in Assam have been clubbed into eight clusters and global bids would be invited to select players to exploit and monetise them. These fields hold estimated reserve of 21 million metric tonnes (MMT) of oil and oil equivalent gas. The rest of fields are mostly spread across Mumbai offshore and Krishna-Godavari basin. These 67 fields, including the 12 from Assam, were discovered some 20-30 years back and are lying undeveloped with either the Oil India Limited (OIL) or Oil and Natural Gas Corporation Limited (ONGC).
Dharmendra Pradhan, Union petroleum and natural gas minister, said here today that the bidding process would be an investor friendly one which would put on offer 46 contract areas consisting of all the 67 fields. These fields altogether hold in-place oil and oil equivalent gas volumes of 86 MMT, which amounts to around Rs. 70,000 crore of reserves. The bidding process will close on October 31.
Pradhan said exploiting these small fields required micro-level management and specific technologies, making it unattractive for the two public sector oil giants to invest in. Hence, these fields have been lying unexploited over the years. The estimated capital expenditure required to fully exploit these fields would be around Rs. 4,000 crore, according to Pradhan. “By December we will end the whole process and by January 1, 2017 exploration and production at these fields will start,” he added.
The minister was in the city to participate in an interactive session with prospective investors to discuss and showcase the potential of the fields being offered as part of the ‘Discovered Small Fields Bid Round – 2016’.
Today’s event was an well attended one with 200 representatives from oil and gas companies like Jubilant, Hindustan Oil Exploration Company, Great Eastern Energy Corporation Ltd, GeoEnpro Petroleum Ltd, Nippon Power, Eagle Offshore, Jaybee Energy, SKG Global, Cheval Developers, PFH Capital Advisors, Nityam Resources, Siddarth Enterprises etc. taking part in it.
Such road shows will also be held in the United States, London, Dubai, Oman and Singapore in coming days.
The minister said that Assam contributed around 10 per cent of the country’s total crude oil and natural gas production and within the present resources available, 44 per cent has been tapped, leaving an opportunity to establish and develop the remaining 56 per cent resource base in the region.
The bidding policy will have moderate royalty structure, customs duty exemptions and complete marketing and pricing freedom for the sale of produced crude oil and natural gas. Up to 100 per cent foreign direct investment (FDI) participation by foreign companies, joint ventures are allowed in bidding process.
The minister also told that this bidding policy marks a shift from the earlier ‘Production Sharing Contract Model’ to a simpler and easier ‘Revenue Sharing Contract Model’. Here the bidders will be required quote the revenue they will share with the government at low and high end of price and production band.
India’s energy requirement has been increasing at a very rapid rate and it has recently emerged as the third largest consumer of oil in the world. Around 79 per cent of the country’s oil demand and 42 per cent of gas demand are currently met by imports.