India's State-owned ONGC has received bids for 50 out of the 64 small and marginal oil and gas fields it has offered in a first of its kind bid round for raising production by involving private companies. As many as 12 companies made 28 bids for 50 fields at the close of bidding on January 17, sources privy to the development said. ONGC had clubbed the 64 fields into 17 onshore contract areas that have a cumulative 300 million tonne of oil and oil equivalent natural gas reserves. The sources said 28 bids were received for 14 clusters, covering 50 fields, and no bids were received for 3 clusters covering 14 fields.
Duganta Oil and Gas Pvt Ltd made four bids, while Orissa Stevedores Ltd, Priserve Infrastructure Pvt Ltd and Udayan Oil Solutions Pvt Ltd made three bids each. ONGC wants partners who can raise output beyond a pre-agreed baseline and will share revenues from such incremental production with them. The sources said salient features of the ONGC offering include complete marketing and pricing freedom to sell oil and gas on arm’s length basis through competitive system.
The contractor will be selected on a revenue sharing basis. The revenue will be shared on incremental production over and above the baseline production under Business-As-Usual (BAU) scenario, they said. Contract period will be for 15 years with an option to extend by 5 years. ONGC invited bids under the production enhancement contract (PEC) from the interested companies, who can bring in technology for raising the output.
The government has been unhappy with ONGC over its stagnant oil and gas production, and inducting partners in small and marginal fields was a way of raising output that was agreed to in a meeting with Prime Minister Narendra Modi in 2018. ONGC had previously experimented with PEC contracts for two fields but has not been able to select a partner because of receiving conditional bids.
The latest PEC tender is on more liberal terms. There will be a reduction of 10 per cent in the royalty rate for additional production of natural gas over and above BAU scenario. Exploration will be permitted during the contract period, including the right to explore all kinds of hydrocarbon.
Source: Financial Express