KOLKATA (miningweekly.com) – Reversing its earlier decision to privatise small, ageing or underperforming oil and gas fields held by national exploration and production (E&P) companies, the Indian government has now directed companies to submit time-bound action plans to boost production from these assets.

Earlier this year, the Indian government approved the privatisation of 11 small oil and gas fields held by domestic E&P majors, including ONGC and Oil India Limited (OIL), and identified 44 other similar fields wherein it had directed the E&P companies to rope in local or global companies as technology partners to enhance production.

In the case of the 11 small and ageing fields, the government has proposed that the national oil companies hive off a minimum 60% stake in these assets to domestic or global private E&P companies.

However the move raised the hackles of national oil company officials, who are opposing the move to grant financial incentives to prospective private partners on the grounds that national oil companies were never offered similar incentives to maintain the “difficult and challenging” assets.

Government officials said that the policy for privatising ageing and underperforming oil and gas fields had only been at the discussion stage and never finalised. However, on review of these discussions over the past few months and based on the views submitting by the national oil companies, the Petroleum and Natural Gas Ministry had decided not the proceed any further on the issue.

Instead, ONGC and OIL would be expected to submit their plans to boost production from these assets. In fact, the Ministry has given the go-ahead to these companies to strike up their own partnership with domestic or international oil and gas companies for production enhancement processes.

The national oil companies have been empowered to enter into contracts with global oilfield service providers under a fixed fee based on per unit increases in production, without having to enter into any production or revenue sharing agreement with such partners, the officials added.

It was pointed out that national oil companies would be under pressure to submit an aggressive plan that would ensure higher production and they would be under close government scrutiny. This comes against the backdrop of India’s crude oil production dropping for the sixth consecutive year in 2017/18 to 35.68-million tons, increasing the country’s import dependency to 82% and undermining government’s target to reduce such import dependency by 10% by 2022.

Under the circumstances, the government is banking on an one-million- to two-million-ton-a-year crude oil increase from small oil fields and the auction of new fields under the Open Acreage Licensing Policy.