Stage set for auction of small oilfields in India
The process of auctioning 69 marginal fields – where oil or gas has been discovered but undeveloped – will begin later this month, which will unlock Rs 75,000 crore worth of energy reserves.
The government has approved a new marginal field policy that provides for a slew of fiscal incentives, exploration and marketing freedom.
“These small and marginal discovered oil and gas blocks, surrendered by state-owned ONGC and Oil India, would be auctioned in early December … the process for the auctioning would start later this month and potential investors could visit the data room before bidding for the blocks,” a senior oil ministry official said.
Of the 69 fields, 36 are offshore fields and 33 are onshore. The fields are located in Arunachal Pradesh, Assam, Tamil Nadu, Rajasthan and Nagaland.
The marginal field policy approved by the cabinet recently allows for the grant of a single licence for exploiting conventional and non-conventional hydrocarbons, lifts restriction on exploration activity during contract period, exemption from payment of oil cess and customs duty on machinery and equipment.
Operators can also set prices on an arms length basis, while the government’s share of the revenue will be calculated according to the natural gas pricing guidelines.
However, the arm’s length price will be the basis for determining the government’s share if it is more than the pricing guideline.
“An integrated marginal field policy under the revenue-sharing regime, along with uniform licensing for all hydrocarbons, would be pivotal to develop reserves which have not been monetised for many years because of their isolated locations, small size, high development costs and technological constraints,” former ONGC chairman and managing director R.S. Sharma said.