In 2016, the government brought in a new DSF policy wherein 'idle' small discovered fields of state-owned Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) were taken away from them and auctioned to private players on liberalised terms including marketing and pricing freedom and lower taxes.
ONGC and OIL say they have not been able to develop the fields due to their small size, and the current capped prices are making their development unviable. Private companies will, however, get full pricing and marketing freedom.
Oil Minister Dharmendra Pradhan had last month told Parliament that ONGC had spent Rs 12,826 crore and OIL another Rs 224.27 crore on the 115 oil and gas discoveries that were taken away from them by the government for auctioning to private companies under DSF bid rounds.
Under the DSF bid round-I in 2017, 67 discoveries, mostly of ONGC, were auctioned, while in the second round, another 48 finds are being auctioned.
ONGC and OIL are not compensated for the amount they had spent on discoveries of these oil and gas reserves. Unlike state-owned firms, the private players are allowed pricing and marketing freedom to make these discoveries viable. The two state-owned firms have previously stated that they could not produce from the discoveries as they are uneconomically at current cap prices.
The 67 discoveries under the DSF bid round-I are estimated to have in place reserves of 86 million tonne of oil and gas equivalent. In DSF-II, the 48 discoveries of ONGC and OIL offered for bid are estimated to have in place reserves of 163.08 million tonne of oil and gas equivalent.
When the DSF bid round-II was launched in August 2018, Pradhan had said the fields hold resources worth Rs 1 lakh crore. Some of these resources would translate into higher revenue for the government by way of increased royalty paid on production, taxes and profit petroleum.
He had expected the government getting as much as Rs 45,000 crore in royalty, taxes and profit petroleum over the life of the fields.
In DSF-II, 59 discoveries have been clubbed into 25 contract areas spread over 3,042 square km and eight sedimentary basins. The fields are being offered in Rajasthan, Gujarat, Kutch and Cambay shallow waters, Mumbai offshore, Assam and Tripura, Mahanadi shallow water, Andhra Pradesh onland and KG offshore.
In the DSF round-I, Rs 34,600 crore of resources were bid out. A total of 134 bids were received for 34 blocks out of 46 on offer.
The government is expecting a revenue of Rs 9,000 crore from the fields bid out in DSF-I, with first oil expected in 2020.
DGH officials said the main features of DSF-II include a single licence for exploitation of both conventional and unconventional hydrocarbon, prior technical experience not a pre-qualification criterion, no upfront signature bonus and full pricing and marketing freedom. Royalty rates have been reduced to 7.5 per cent from 10 per cent for offshore blocks.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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