The core groups decision will catalyse $100 million worth of investment in exploration immediately and will double the exploration acerage under joint venture to 1,80,000 sq kms
The group of ministers (GOM) constituted by the Prime Minister to review pending production sharing contracts for oil exploration and production has given the go-ahead to the petroleum ministry to finalise and sign contracts for 26 exploration blocks for which awards have already been made.
Significantly, the GOM also decided to extend ONGC development costs and recommend the same to the cabinet. The decision comes in the wake of the ONGCs demand for reimbursement and the Comptroller and Auditor Generals strictures on the same issue of Mukta Panna.
GOM has also decided to recommend cabinet approval for the award of the Ratna and R-Series medium-sized discovered oilfields and 11 small fields to private consortia along with suitable compensation to the Oil and Natural Gas Corporation (ONGC) for the costs incurred by it.
These decisions were taken by the group, comprising deputy chairman of the Planning Commission, finance minister and the petroleum minister, at its second meeting here on Monday.
The meeting also decided that the finance ministry will consider duty-free import of materials for petroleum operations by sub-contractors, a facility that is currently being enjoyed by the main contractors on the condition the petroleum ministry will come up with a workable scheme to prevent misuse of this facility.
A total of 35 blocks have been awarded for oil exploration since 1991.
Of these, production sharing contracts (PSCs) have been signed for nine blocks. PSCs for 26 blocks have been awaiting signature.
The GOMs decision will catalyse about $100 million investment in oil exploration immediately and it will double the exploration acreage under joint venture to about 180,000 square km.
While recommending the award of the 12 discovered fields, the group made it clear that ONGC should be suitably compensated for the past costs incurred by it either through the governments share of profit oil or through the administered price mechanism (APM) till such the APM exists.
The production from these 12 fields is expected to be about 1.3 million tonnes per annum. The investment in these fields is over $300 million.
Three million tonnes of oil is already flowing from joint ventures already entered into by the government with private Indian and foreign companies. An investment of over $1.5 billion has been committed in the 18 discovered fields contracts already signed.
The small fields are mainly in onshore Gujarat and the Ratna and R-Series are in Mumbai offshore.
Since 1991, a total of 30 small and medium discovered fields have been awarded for private participation. Contracts for 18 fields have already been signed. These 12 contracts are awaiting finalisation.
GOM had invited ONGC to make a detailed presentation. ONGC said the joint ventures were welcome but the corporation should be compensated for past exploration and development costs. The petroleum ministry proposed that in future ONGCs compensation for past costs could come out of the profit oil accruing to the government.
The group recognised that the relationship between ONGC and the government has changed significantly in the past few years. ONGC is now a company enjoying navaratna status.
