India's government placates opposition, but to auction oil, gas blocks
KOLKATA (miningweekly.com) – The Indian government has clarified that oil exploration and production (E&P) companies are eligible to bid in a competitive bidding process for 67 marginal oil- and gasfields.
These marginal oil- and gasfields, which were formerly owned by State-owned E&P majors such as ONGC Limited and Oil India Limited (OIL), are up for auction to domestic and international oil majors following the failure of national oil companies to develop the assets.
In the face of political opposition in the north-east province of Assam, where 12 of the 67 blocks are located, government has clarified that ONGC and OIL have the right to bid afresh for the assets previously owned by them, stating that there is no government policy to bar State-owned E&P companies from participating in the international competitive bidding process.
Several regional political parties have launched petitions against the “privatisation” of oil and gas assets.
These regional political parties claim that since ONGC and OIL failed to develop these marginal oil- and gasfields on the grounds that they are “uneconomic”, there is little justification for the Indian government to expect the assets to be viably developed by private companies.
The Ministry of Petroleum and Natural Gas has informed Parliament that it has received many petitions from local political parties and activists in Assam opposing the auction of the 12 blocks to private oil companies.
A government official said the Ministry had, in an effort to placate the opposition, determined that national oil majors were “totally free” to compete with domestic and international companies in the bidding process to secure back the 12 blocks if they revised their earlier stand and were sure of viably developing them.
The Indian government has already commenced the process of auctioning off the blocks, having completed road shows to woo investors, and the final award is expected to be made by December.
The auction of the marginal oil- and gasfields will be a test case under the newly unveiled Hydrocarbon Exploration and Licensing Policy, under which the earlier practice of awarding blocks under a production sharing contract will be replaced by revenue sharing contracts.
To further sweeten the deal for successful bidders, the government will permit pricing freedom for oil and gas produced from these assets.
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