First oil from small field award in 4 months, says bid winner

Of the 22 companies that won the bids, 15 were new to the sector

In the recently concluded auctions for small oilfield discoveries, a key investor attraction was a block in the Cambay basin. It got 19 bids. The winner here, Dubai-based South Asia Consultancy FZE, only foreign entity to have player to get a block in this round, expects to start production within four months.

It believes that from a minimal investment of Rs 100 crore for five to six wells, it could unearth oil reserves worth at least Rs 5,000 crore from the contract area — CB/ONDSF/South Patan/2016. 

“We have got a very lucrative area for exploration. By government estimates, the block has 3.2 million barrels of oil, worth Rs 1,200 crore. But, our geologist found the potential to be four to five times higher, in the range of Rs 5,000 crore,” said its managing director, D S Rajput.

The company specialises in offshore and onshore drilling and workover sectors as a service provider; it is present in Iran. The block has two existing wells.

“We expect to be the first player to start production from this round. This round was very investor-friendly, with no prior experience needed in the sector.” Petroleum Minister Dharmendra Pradhan had said a second round of auctions for discovered small and marginal fields (DSF) would happen in 2017-18.

The company is looking forward to this, saying it would have an advantage in being the first small field player from abroad to have already entered.

“It is believed that in DSF-II, the Directorate General of Hydrocarbons might seek prior experience of at least one year in the sector,” explained Rajput.

Discovered small fields bid round

Interestingly, of the 22 companies that gave winning bids, 15 were new to the sector. Of the 46 blocks on offer, 31 got successful bids, with investors showing more keenness on onshore ones. The DSF round was launched in May last year. The government expects a cumulative peak production of 15,000 barrels of oil per day and two million standard cubic metres a day of gas over the economic life of the fields awarded.