Second tranche of oil fields on offer, Vedanta to get 41 OALP blocks: Govt

Petroleum Minister Dharmendra Pradhan
India rolled out the second auction for discovered small fields (DSF-II) on Thursday, which is likely to bring in investment to the tune of Rs 1 trillion in the sector and contribute about Rs 450 billion revenue to the government.

Petroleum Minister Dharmendra Pradhan said the government will be signing contracts for the first round of Open Acreage Licensing Policy (OALP) in a week’s time. OALP and DSF have replaced bidding under the New Exploration and Licensing Policy.

“Under the current round of DSF, 25 contract areas covering 59 discovered fields, spread over 3000 square kilometer will be on offer. These blocks are expected to have an in-place volume of 190 million tonne (MT) or 1.4 billion barrels of oil or oil equivalent gas,” Pradhan told the media. He added this is likely to bring in job opportunities for about 85,000 people. The bidding for DSF-II will start in September and will be over by December.

During the first round of discovered field auctions, the government had received 134 bidders for 34 blocks on offer. Out of this, 30 contracts were awarded to 20 companies, out of which 13 were new entrants in exploration and production sector. From the first round, where Rs 460 billion worth of assets were on offer, the gross royalty collection and state royalty is expected to be around Rs 50 billion and Rs 21 billion, respectively. 

The government’s revenue share would be in the range of Rs 93 billion. From the first round, government expects a cumulative peak production of 15,000 barrels of oil per day and two mscmd (million standard cubic metres a day) of gas over the economic life of the fields awarded. During the last round of DSF, revenue was calculated on the basis of an international oil price of $45 a barrel, while it increased to around $55 a barrel, Pradhan said.

Batting for level playing field between private and public sector players in the sector, Pradhan said the question of whether there should be a preference for Oil and Natural Gas Corporation (ONGC) and Oil India needs to be examined. “We want competition and more production of oil and gas through the entry of private players,” he added.

During OALP-I, Vedanta got the highest number of 41 blocks, out of a total 55 on offer. OIL, Hindustan Oil Exploration Company (HOEC) and ONGC got the remaining blocks. “Vedanta got 41 blocks, while ONGC got only 2 blocks through a competitive bidding process. That is not the fault of the government,” Pradhan said.

ONGC, despite bidding for 30 blocks, got even fewer blocks than OIL. The 55 blocks are spread across 10 sedimentary basins covering an area of 60,000 square kilo meters.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel