Govt to give 60% stake in ONGC fields to pvt firms

Nearly 25 years after ONGC’s prime discovered oilfields were privatised, the oil ministry has identified 11 producing oil and gas fields of the staterun firm for handing over to the private sectors to raise output.

The ministry is approaching the Cabinet to allow private companies take 60 per cent stake in producing oil and gas fields of national oil companies, Oil and Natural Gas Corp (ONGC) and Oil India Ltd (OIL), with the view that they would raise production above the baseline estimate.

As many as 15 fields — 11 of ONGC and four of OIL — with cumulative in-place reserves of 791.2 million tonnes of crude oil and 333.46 billion cubic metres of gas have been identified, sources privy to the development said. These include Kalok, Ankleshwar, Gandhar and Santhal — the big four oilfields of ONGC in Gujarat.

All of these fields are in areas that were given to the national firms on nomination basis and the current policy does not allow private firms taking equity stake in them. So, a change in policy is required for which the ministry is approaching the Cabinet, sources said. The policy allows giving out of participating interest (PI) or a stake to a private firm only in the blocks or areas awarded in open auctions under New Exploration Licensing Policy (NELP) since 1999.

However, only exploration acreage was auctioned under global bidding in such rounds. All areas prior to that were given to ONGC and OIL on nomination basis.

A baseline considering current oil and gas production from the 15 fields would be set and private firms taking equity stake would get only the incremental volumes, sources said. The fields would be auctioned and any firm committing the maximum capital investment within 10 years of the contract award and the largest share out of its net revenue to the government would be awarded the field.

The 15 fields selected are out of review of 202 fields operated by the national oil companies. The fields chosen are ones that hold reserves of 20 or more million tonnes of oil equivalent and have crossed the half-way mark on a score (indicative of poor field performance) combining exploration index, current recovery and production decline rate in the past three years.

Of the 202 fields, 141 are either less than 10 years of age or had shown some positive change in the year-on-year production rate.

As many as 44 fields of ONGC and OIL have been identified for production enhancement through technical services model where technical tie-ups would get the “tariff” that they bid as a return for increasing the output “over the baseline production” for 10 years initially.

Sources said the ministry is unhappy with the near stagnant oil and gas production and believes giving out the fields to private firms would help raise output. It has been tasked by PM Narendra Modi to cut oil import dependence by 10 per cent by 2022 over 77 per cent dependence in 2014-15. The dependence is now over 80 per cent.

The privatisation is a repeat of the infamous round in 1992-93 when 28 mediumsized discovered fields like Panna/Mukta and Tapti in the western offshore were given to now defunct Enron Corp of the US and Reliance Industries. Under this regime, ONGC was made the licensee and given an option to farm in 40 per cent of stake. The controversial privatisation under the then oil minister Satish Sharma had resulted in a CBI inquiry.