Hydrocarbons sector: Next bidding round for discovered small fields in Oct

This will happen simultaneously with the Open Acreage Licensing rounds

Giving a major boost to new entrants in the hydrocarbons sector, the Ministry of Petroleum and Natural Gas is set to launch the second round of bidding for discovered small and marginal fields (DSF) in October. This will happen simultaneously with the Open Acreage Licensing (OAL) rounds. 

The OAL policy was officially launched on Wednesday by Petroleum Minister Dharmendra Pradhan. “We are planning to come up with DSF II, in order to attract more fresh players and start-ups to the sector, as big companies may not be keen on small blocks and their focus would be on OAL. This will be kicked off from October, happening along with the OAL rounds,” said an official source close to the development.

In the first round of small field auction, of the 22 companies that were successful in grabbing blocks, 15 were newcomers. A majority of the bidders were keen on onshore blocks, with 31 of the 46 blocks getting successful bidders. According to the strategy chalked out by the petroleum ministry, small field rounds are likely to be over by the end of March 2018.

Meanwhile, those players who were awarded the blocks in the first round of DSF have started getting mining leases. “We have already got the mining lease for one of our blocks. With all the clearances in place, we expect to start production within three years time. We are also looking forward to OAL rounds and DSF II,” said P Elango, managing director of Hindustan Oil Exploration. For the blocks awarded under DSF so far, the expected in-place reserves are 40 million tonnes of oil and 22 billion cubic metres of gas, to be monetised over 15 years. 

“In our case, we will have to get the mining lease, and it needs to be renewed. We expect that it is likely to happen within a month,” said D S Rajput, managing director of Dubai-based South Asia Consultancy FZE, only foreign entity to have got a block in DSF. He added his company would be bidding for more blocks in the second round of DSF.

Elango, who formerly spearheaded the operations of Cairn India, said, “In OAL rounds, a lot of foreign and big players are likely to participate. The major advantage that I see is that the explorer will also have an idea about the adjacent areas as well. Moreover, pricing freedom will be the biggest advantage compared to the NELP rounds.” The blocks awarded in the DSF round expects a cumulative peak production of 15,000 barrels of oil a day and two mscmd (million standard cubic metres a day) of gas over the economic life of the fields awarded. The estimated total revenue is a little over Rs 46,000 crore.