Covid-19 impact: Fresh auction round likely for ONGC, Oil India blocks

The Ministry of Petroleum and Natural Gas (MoPNG) is coming up with a fresh strategy to increase hydrocarbon production in the country. It is likely to open bidding for production enhancement contracts (PECs) of old oil blocks of Oil India (OIL) and Oil and Natural Gas Corporation (ONGC). 

It is also planning to give sops to producers by extending concessions, stretching timelines and asking the finance ministry to reduce oil cess. The PEC bidding will be similar to ONGC seeking bids for 49 hydrocarbon fields last year.

“In order to help companies tide over the Covid crises, we are mulling options to extend timelines, give concessions, and reduce oil cess to producers,” said an official close to the development. After the Covid-19 breakout, various industry bodies and companies had approached the MoPNG, seeking a reduction or deferment of royalty, cess and profit petroleum paid by companies to the government.

In addition, companies batted for a higher gas price, too. 

In a letter to the finance ministry, the Association of Oil and Gas Operators (AOGO) had said oil and gas operations are now ‘unviable’ owing to the higher share of government taxes.

Similarly, to boost oil and gas production, the government is set to come out with a fresh PEC tender for old fields. 

“We have already come out with a policy on PEC. On the lines of the ONGC bids last year, we will be soon coming up with an auction round for fields under the PEC,” he added. 

According to an industry source, the fields may include older ones of government-owned companies like Geleki in Assam and Kalol field in the Ahmedabad-Mehsana block of the Cambay basin.

It is not yet finalised whether ONGC and OIL will be allowed to invite bids or the government will be facilitating the process.

ONGC had awarded 49 marginal oil and gas fields to seven bidders earlier this year. These fields are spread across Gujarat, Tamil Nadu, Andhra Pradesh, and Assam, covering 13 on land contract areas. However, lesser-known players like Duganta Oil and Gas, Oilmax , Deep Industries, Dravida Petroleum, Hermes Tech, Shivam Crusher, LNG Bharat, Udayan Oil Solutions, Preserve Infrastructure, Syndicate, M&S Co, Advent Oilfields, and Orissa Stevedores had only participated in the process.