Pradhan kicks off roadshow for auction of 46 oil & gas fields

Kicking off the first roadshow for auctioning 46 discovered small oil and gas fields, Union Oil Minister Dharmendra Pradhan today expressed confidence of getting good response for the blocks which are being sold with least conditionalities.
Promising a transparent regulatory regime and greater ease of doing business, the minister said the current auction, as also the recently announced Hydrocarbon Exploration and Licensing Policy (HELP), are both significant improvements over the previous NELP regime.
"The spirit behind the journey from NELP to HELP is to create administrative and fiscal systems which are a lot simpler and transparent," Pradhan said, adding that since these fields have no pre-qualification criteria, he expects good participation from even startups and individuals with experience in the field.

He said as part of the discovered small fields bids, 67 different small fields across nine sedimentary basins are on the block. Out of this, 36 are offshore fields and the rest onshore or shallow water fields.
These blocks were originally discovered by ONGC and Oil India some 40 years ago, but could not be developed due to various reasons.
These 67 blocks on offer are present in 46 contract areas with 625 million barrels of oil or oil equivalent gas of in-place reserves worth Rs 70,000 crore. These are spread over 1,500 sq km over land, shallow water and deep-water areas, he added.

The minister further said the bid round aims to boost the oil and gas production and is in line with the government mission of reducing import dependence by 2022 by 10 per cent from the present 78 per cent.

"We realised that without addressing the fundamental challenges facing our domestic E&P industry, we won't be able to ramp up domestic oil and gas production. We are also convinced that a simplified and transparent administrative and regulatory setup has a huge role in fast-tracking developmental activities in hydrocarbon sector," Pradhan said.
The country meets 78 per cent of its oil and gas demand through imports. Of its total demand of 226 million tonnes, only 70 million tonnes are produced domestically.

"Given our 78 per cent dependence on imports, I strongly believe that all quantities of hydrocarbon - big or small - are crucial for us and therefore, we feel that these new bids are a timely step in the right direction," he said.
Some of the key features of the new policy include no upfront signature bonus, freedom in pricing, no oil cess, custom duty exemption and graded royalty rates, Director General of Hydrocarbons Atanu Chakraborty said.
Oil Secretary K D Tripathi said e-bidding will run from
July 15 through October 31, post which in two months investors will be selected and contracts will be signed by January.

He also said the next round of roadshows will be held in Bengaluru and Guwahati, while international roadshows will be conducted in London, Houston, Calgary in Canada, Dubai, Singapore and Perth in Australia.
The present auctions, to be conducted on simpler contractual terms together with pricing and marketing freedom, will be the first licensing round in over five years, Tripathi said.
The government had liberalised exploration and production regime in the early 1990s. In the late 1990s, it further liberalised the E&P sector with the introduction of NELP regime that allowed 100 per cent FDI and offered a level playing field to private and national oil companies.

NELP was based on production sharing contract (PSC) which meant revenue sharing with government after cost recovery by the contractor.
The fields offered for global bidding hold 625 million barrels of in-place oil/gas reserves.
Pradhan said 46 fields that are offered are actually 67 small and marginal discoveries that have been clubbed. ONGC and Oil India "surrendered" these fields as they could not develop them because of huge overhead cost and uneconomic size, he said but added that these national exploration companies will not get compensation from the bidders at all.
"May be ONGC and OIL can ask for some revenue sharing, apart from participating in these bids," Pradhan said

The last exploration licensing round concluded in March 2012. That was the ninth round of bidding under NELP. A total of 256 blocks were awarded in the nine rounds of NELP.
In the current round of bidding, as many as 67 idle discoveries are clubbed into 46 fields for offer in the international bidding round. Of these, 28 discoveries are in Bombay offshore, 14 in the Krishna Godavari basin and 10 in the Assam shelf.
In-place reserves in these identified discoveries/ fields is about 88 mt of oil/oil equivalent gas. The biggest discovery among the lot is the D-18 in Bombay Offshore that alone holds 14.78 million tonnes of in-place oil reserves.

Among gas discoveries, the largest is ONGC's B-9 in offshore Kutch basin that has in-place reserves of 14.67 bcm.