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Aggregate|Exploration|Gas|Hydrocarbons|Oil And Gas|Petroleum|Operations
aggregate|exploration|gas|hydrocarbons|oil-and-gas|petroleum|operations

India’s Petroleum, Natural Gas Ministry to overrule ONGC on small oil, gas fields

12th November 2018

By: Ajoy K Das

Creamer Media Correspondent

     

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KOLKATA (miningweekly.com) – Indications are emerging that the Indian government will take away oil and gas, small discovered fields (DSF) from ONGC and put them up for auction to private investors, overruling opposition from the State-run exploration and production (E&P) major.

In a move that some officials claim is privatisation of ONGC’s assets, the Petroleum and Natural Gas Ministry is pushing ahead with the auctioning of as many as 149 oil and gas DSFs for private oil companies, after these fields were taken out of the ONGC fold, sources familiar with the plan say.

This would be the second time that the Ministry would be pushing for such an auction after one was stalled early this year in the face of opposition from ONGC.

At the time, ONGC claimed that if the intention of the government was to bring in private oil exploration and production companies for maximum monetisation of these DSFs through greater use of production enhancement technologies, the national E&P major should be allowed to outsource operations and not hand ownership of these assets to private companies.

However, the Ministry, at a recent meeting, felt that ONGC should focus its operations on large oil and gas field assets already in its possession and maximise production from these, since as much as 60% of its total production was accounted for from large fields, while DSFs contributed a mere 5% to its total oil and gas production.

Last year, the Directorate General for Hydrocarbons identified 15 DSFs with aggregate reserves of oil of 791-million tons and natural gas of 333-billion cubic meters to be taken away from ONGC and put up for auction.

The Ministry has already auctioned 34 DSFs with successful bidders permitted free pricing for the production, while auction for another 25 DSFs is currently ongoing. However, with the Prime Minister’s Office, at a meeting last month, stressing the need to increase domestic oil and gas production, the Ministry is now keen to take away more DSFs from ONGC and put them on offer for private companies, the sources say.

ONGC’s counter proposal suggested that the government permitted ONGC to get into revenue sharing agreements with private companies for the DSFs with the latter given a majority stake in the assets, while ONGC retains a minority stake instead of handing over total ownership to private investors.

According to indications available from the government, the Ministry will overrule ONGC’s suggestion as it believes that full ownership and control over DSFs will be more attractive for private companies to put in production enhancement technologies, the sources add.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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