KOLKATA (miningweekly.com) – India’s Union Cabinet has approved the second round of the Discovered Small Field Policy, paving the way for 60 small oilfields to be put up for auction.
These discovered small and unmonetised discoveries host an estimated 194.65-million tons of crude oil or crude oil equivalent natural gas. The approval of the policy will enable these blocks to be developed through competitive bidding, government officials said.
Of these discovered small blocks, 22 fields are currently held by national oil exploration and production major, ONGC, five by Oil India, 12 which had earlier been relinquished by developers and 21 which have failed to find any takers in previous auction rounds conducted by the government.
Once small fields are put up for competitive bidding, it will open up the second auction platform in the oil and gas sector of the country. Last month, the government, after an eight-year hiatus started auctioning 55 major oil and gas fields under the newly framed Open Acreage Licensing Program (OALP).
Under OALP, part of the new Hydrocarbon Exploration Licensing Policy, exploration companies can carve out blocks of their choice and once expressions of interests are accepted by the government, the latter will hold an auction every six months to allocate the assets to successful bidders.
However, government officials have said that the “mood over the outcome of the two auction platforms, one currently open and another slated to commence, was cautious given the past response”.
It was pointed out that in the case of the auction opened last month for 55 fields, no international exploration and production major had shown interest to participate and responses had been confined to mostly Indian oil sector companies.
Similarly, in the first round of auction held for small discovered fields in 2016, when 67 fields were offered for development clubbed into 46 contracts, with estimated reserves of 80-million tons of oil and oil equivalent natural gas, a total of 30 contracts for only 43 fields were signed by 20 companies and one successful bidder refused to sign a contract.
The Petroleum and Natural Gas Ministry, thereafter, laid down that in future auctions, a participant that did not sign a contract despite a successful bid, would be barred from future auctions for least two years.
Meanwhile, a study of the Union Budget 2018/19, placed before the Parliament on February 1, shows that Indian government-owned oil exploration and production companies will invest a combined $13.9-billion in the next financial year, half of which will go into exploration and production projects.
However, the planned capital expenditure on exploration and production by the government companies in the next financial year would be lower than the $7.50-billion earmarked by the companies in 2017/18.