Shares of oil exploration companies were in huge demand today, surging up to 20 per cent, as the government decided to auction 69 idle oil and gas fields of state-owned ONGC and Oil India to private firms on a new revenue sharing model and liberalised terms.
Shiv-Vani Oil & Gas Exploration Services rallied 19.97 per cent, Jindal Drilling & Industries zoomed 18.83 per cent, while Hindustan Oil Exploration Company soared 6.41 per cent on BSE.
Shares of Selan Exploration Technology climbed 5.45 per cent, Dolphin Offshore Enterprises surged 5.14 per cent and Aban Offshore gained 2.61 per cent.
In a 'paradigm' shift, government will auction 69 idle oil and gas fields of state-owned ONGC and Oil India to private firms on a new revenue sharing model and liberalised terms including pricing and marketing freedom.
The 69 small and marginal fields holding 89 million tonnes of oil and gas resources, worth Rs 70,000 crore at current rates, will be given to explorers offering the maximum revenue from hydrocarbon produced to the government.
"This is a paradigm shift from the controversial production sharing contract (PSC) and cost recovery model to a more equitable revenue sharing model that protects government interest in both low oil and high oil price scenarios," Oil Minister Dharmendra Pradhan said.
Bidders will be asked to quote the revenue they will share with the government at low and high end of price and production band to capture windfall of steep rise in prices as well as quantum jump in production.
The government will allow companies to sell oil as well as natural gas produced from these fields at market price and with no restriction on who they sell the produce to.
