DGH floats tenders for India's first marginal fields auction

DGH floats tenders for India’s first marginal fields auction

Setting the stage for the National Democratic Alliance government’s first oil block auction, upstream

regulator Directorate General of Hydrocarbon (DGH) has floated two tenders for selection of a

consultant as ‘knowledge partners’ and an event management firm to manage bidding for 67

‘discovered small fields’.

Oil minister Dharmendra Pradhan told Business Standard that he would officially launch India’s first

bidding round for small and marginal fields on May 25 that will be followed by domestic and

international road-shows to attract investors amid low crude oil prices. The field has reserves worth Rs

70,000 crore, according to oil ministry estimates.

India conducted its ninth and last bidding round under the previous New Exploration and Licensing

Policy in 2012 awarding 256 blocks to exploration companies. “A total of 67 discovered small fields will

be offered in 46 contract areas through the new revenue sharing model,” the upstream regulator said.

Although the investment sentiment in the oil sector has been impacted by low crude oil prices, Vedanta-

owned Cairn India Ltd, the private operator of India’s largest onland oil and gas block in Rajasthan, said

it would study the data of available blocks on offer for participation in the bid round. “We will evaluate

data from the blocks being offered, to gain further understanding, for firming up our strategy for the

same,” Cairn India Chief Executive Mayank Ashar told Business Standard.

He added that further to the set of policies announced recently to accelerate investments in the oil &

gas sector by the government, the reported launch of the ‘discovered small fields bid round’ later this

month is a welcome move and the company sees a structure and process in these “progressive steps”

being taken by the government.

Of the 67 blocks on offer, 28 discoveries are in Mumbai offshore and 14 are in the Krishna Godavari

basin off the Andhra coast. Also, 10 discoveries are located in the Assam shelf area, according to the oil

ministry.

The discoveries were relinquished by ONGC and OIL in 2012 as they could not develop them because of

small size and unviable price. The discoveries hold in-place reserves of 88 million tonnes (mt) of oil and

oil equivalent gas. This includes D-18 in Mumbai Offshore as the biggest discovery that alone holds 14.7

mt reserves.

The new revenue-sharing regime will replace the controversial production sharing contract model that

allowed all investments to be recovered from sale of oil and gas before profits are shared with the

government.

The ministry has announced under the new policy, a single licence for exploitation of all forms of

hydrocarbons will be issued and operators will have the freedom to sell oil and gas on arms-length

market price.