ONGC gets back petro blocks after decades

Cabinet clears return of Ratna and R-Series fields after idea of inviting private parties to develop these went nowhere

The Union Cabinet, chaired by Prime Minister Narendra Modi, approved on Thursday the cancellation of an earlier award of the Ratna and R-Series petroleum blocks, 130 km from the Mumbai coast, to a consortium of Essar Oil.

And, to revert the blocks to the original licensee, state-run explorer Oil and Natural Gas Corporation (ONGC). There have been substantial changes in the terms and conditions prevalent at the time of issue of the Letter of Award dated March 1996, the government said.  

Considering its huge financial stake in statutory levies from crude oil and natural gas production from these fields, and with the overall objective of raising domestic production, the government decided the fields be reverted to ONGC, which had partially developed the fields and operated these till 1994, went an official statement.

The Union comptroller and auditor general (CAG) had in December said the country lost oil and gas production worth Rs 26,200 crore over  the past decade due to delays in awarding of these hydrocarbon blocks. “Domestic production of 56 million barrels of crude oil (valuing at Rs 25,650 crore) and 920 million standard cubic metres of natural gas (valuing at Rs 550 crore) had been deferred during October 2005 to March 2015,” CAG had said in a report tabled in Parliament. “Further, the government’s take to the tune of Rs 1,050 crore on account of royalty and cess on crude oil and Rs 55 crore towards royalty on natural gas for the period remained deferred and unrealised.”

The medium-sized fields were discovered by ONGC and partially developed in 1979. It started commercial production from one of these in 1983 but stopped after the Centre put up the fields for competitive bidding for exploitation by private parties.

These fields were awarded in 1996 to a consortium led by Essar Oil and the Cabinet had in 1999 approved finalising of the Production Sharing Contract (PSC). However, the issue remained unsettled. Delay in taking a decision on various matters and re-raising of already settled issues led to repeated re-assessments of the financial capability of the successful bidders.

Ujjwala Yojana

The Cabinet also approved the Pradhan Mantri Ujjwala Yojana, for providing free cooking gas (LPG) connections to women from Below Poverty Line (BPL) households. The scheme gets Rs 8,000 crore for 50 million LPG connections, with a financial support of Rs 1,600 for each such household.

The scheme would be implemented over 2016-17, 2017-18 and 2018-19. Finance Minister Arun Jaitley had in his Budget speech last month announced a provision of Rs 2,000 crore for 2016-17 to provide deposit-free LPG connections to 15 million women from BPL families. And, that the scheme would continue for two more years, to cover 50 mn homes.

THE RATNA STORY

• 1979: The medium-sized fields discovered and partially operated by ONGC
  ONGC started commercial production but stopped production after fields put up for bidding.
   
• 1994: ONGC stopped production from the fields.
   
• 1996: Fields awarded to Essar Oil led consortium
  

 

1999: Cabinet approval for finalising the PSC
 

December 2015: CAG said country lost oil and gas production worth Rs 26,000 crore due to delays
 

March 2016: Union cabinet cancels Letter of Award for Essar Oil consortium dated March 1996