KOLKATA (miningweekly.com) – The Indian government will hive off 15 discovered and operational oil and gas fields currently held by national oil companies to private exploration and production (E&P) companies through competitive bidding.
The upstream oil and gas sector regulator, the Directorate General for Hydro-Carbons (DGH), has already prepared a paper outlining rules and norms for such transfers, which will aim to enhance production levels from already producing oil and gas fields.
As per the guidelines framed, a successful bidder will be based on equal weightage on total investment committed by the private investor over a period of ten years. The largest share of revenue will be offered to the government.
The DGH paper notes that, “the partner selected for enhancing production work under the model shall acquire 60% of the farm-in interest in the field on payment of upfront bonus in the competitive bidding process and shall operate the field for the entire duration of the production enhancement contract, which was currently pegged at 20 years or remaining life of the field, whichever was earlier.”
Of the in-production oilfields, 11 were currently operated by national oil major, ONGC Limited, and four by government owned and operated Oil India Limited.
A successful bidder will be given two years to complete technical assessment and data analysis of reserves and subsequently after another year, the field will be handed over for operatorship and private investor to start making its committed investments.
The DGH has stipulated that expenses beyond the commitment investment by the private investor will be share between the private investor and the national oil company in ratio of their equity holding or 60:40 in this case, which will also include mandatory payments like cess and royalties.
At the same time, the government has also identified oil and gas fields currently held by ONGC Limited and Oil India Limited wherein production levels could be enhanced through technical services partnerships without having to relinquish controlling equity interests in these assets.
In case of technical services partnerships, the latter will entitled to tariffs that they bid linked to the incremental production achieved from these fields over a period of ten years.