State-owned Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL) spent over Rs 130 billion on 115 oil and gas discoveries which were taken away from them by the government for auctioning to private companies, Oil Minister Dharmendra Pradhan said Monday.
The present BJP-led NDA government took away so-called idle small and marginal discoveries of ONGC and OIL and auctioned them to private firms under Discovered Small Field (DSF) bid rounds.
Under DSF bid round-1, 67 discoveries, mostly of ONGC, were auctioned, while in the second round, bids for which are due next month, another 48 finds are being auctioned, he said in a written reply to a question in the Lok Sabha.
"As informed by ONGC, an amount of Rs 128.26 billion has been spent by ONGC on the discoveries/fields identified in the first and second round of Discovered Small Field Policy. An amount of Rs 2.24 billion has been spent by OIL in this regard," he said.
ONGC and OIL are not compensated for the amount they had spent on discoveries of these oil and gas reserves. Unlike state-owned firms, the private players are allowed pricing and marketing freedom to make these discoveries viable. ONGC and OIL have stated that they could not produce from the discoveries as they are uneconomically at current cap prices.
"With a view to increasing domestic production of oil and gas, the government in May 2016 launched Discovered Small Field Bid Round-I under which 67 discoveries of ONGC and OIL, which had not been put into production, were offered for auction through international competitive bidding," Pradhan said. "The policy has now been extended to its second round to include 48 un-monetised discoveries of ONGC and OIL under DSF Bid Round-II."
Under DSF-I, 47 companies participated in the bidding process, he said.
ONGC and OIL were also allowed to participate in the auction to get back their own discoveries.
"The 67 discoveries under DSF Bid Round-1 are estimated to have in place reserves of 86 million tonne of oil and gas equivalent. In DSF-II, 48 discoveries of ONGC/OIL offered for bid are estimated to have in place reserves of 163.08 million tonne of oil and gas equivalent," he said.
Pradhan said the government has notified the Hydrocarbon Exploration and Licensing Policy (HELP) on March 30, 2016, which is based on revenue sharing model wherein explorers offering a higher share of oil and gas to the government are awarded blocks.
The salient feature of HELP include single license for exploration and production of conventional and unconventional hydrocarbons like shale oil, he said adding also included in HELP is an Open Acreage Licensing Policy (OALP) wherein investors can carve out the area of their interest for exploration and production of oil and gas and submit expression of interest throughout the year.
HELP has easy to administer revenue sharing model and marketing and pricing freedom for crude oil and natural gas has been guaranteed for operators, he said.
Also, it provides for zero royalty rates for deepwater and ultra-deepwater blocks for first seven years, he added.