ONGC offers 43 of its fields to operators for enhancing production

Oil and Natural Gas Corporation (ONGC) is seeking partners for enhancing production at its oil fields. These ‘marginal’ fields were given to ONGC on a nomination basis. A company statement said that this is in line with its goal of maximising recovery from its producing fields.

According to ONGC, eleven on-land contract areas consisting of 43 oil and gas fields with total in-place oil and oil equivalent gas volume of about 160 million tonnes of oil equivalent (mtoe) are on offer. These contract areas are spread across Gujarat, Assam, Tamil Nadu and Andhra Pradesh. India’s domestic oil production stood at 29.1 million tonnes (mt) in 2020-21. The total import of crude oil was around 226 mt in the same year.

“Eligible companies (Indian or Foreign), either alone or in consortium with other companies, may bid for one or more contract areas,” a company statement said.

This isn't the first time ONGC will be undertaking this exercise. “ONGC has successfully contracted 21 fields in different assets for enhancement of production through earlier rounds of bids,” a company spokesperson told Business Standard. The experience till now has been mixed with some success being reported through higher production, but other fields have shown nil improvement.

The Centre has been pushing ONGC to increase its oil and gas production in order to trim imports. It has also been taking away fields given to ONGC and fellow public sector undertaking Oil India (OIL) on a nomination basis and then bidding them out under the Discovered Small Field (DSF) bid rounds. The goal there is to attract fresh capital and also enhance domestic production.

Responding to a query on how the ONGC offering is different from the DSF programmes, the ONGC spokesperson said, “DSF is for the fields which are not monetised where as in these fields on offer the production has commenced and are being offered for enhancement of production.”

ONGC said it is inviting the bids through its e-bidding portal by December 3, 2021. A pre-bid conference will be held on October 20, 2021. There will be complete marketing and pricing freedom to sell Hydrocarbons on arm’s length basis through competitive bidding. The partner will be selected on revenue sharing basis. The revenue will be shared on incremental production over and above the baseline production under Business-as-usual (BAU) scenario.

The initial contract period will be of 15 years with an option to extend it by five years. There will also be a reduction of 10 per cent in the royalty rate for incremental production of natural gas over and above BAU scenario.

According to ONGC, there will be an additional incentive for partners to enhance production beyond committed incremental production.