Govt may of­fer up to 60% stake in PSUS oil fields to pri­vate cos

IN­DIA IS WORLD'S 3RD LARGEST CRUDE IMPORTER, BUYS 80% OF ITS SUP­PLIES FROM OVER­SEAS

Resource Digest - - CONTENT -

In­dia plans to of­fer stakes of up to 60 per cent in oil and gas fields owned by state en­ergy com­pa­nies that are al­ready un­der pro­duc­tion to pri­vate firms, said five gov­ern­ment and com­pany sources with knowl­edge of the mat­ter. The gov­ern­ment is mak­ing the de­ci­sion af­ter fail­ing to draw in­vest­ment from global oil ma­jors in new fields.

The plan would boost In­dia’s do­mes­tic oil and gas out­put and would meet Prime Min­is­ter Naren­dramodi’s tar­get to re­duce oil im­ports by 10 per cent by 2022. How­ever, the plan could re­duce prof­its of state-owned com­pa­nies.

In­dia is the world’s third-largest crude importer, buy­ing 80 per cent of its sup­plies from over­seas. The sales plan would af­fect so-called “nom­i­na­tion blocks” or fields handed to sta­te­owned Oil and Nat­u­ral Gas Cor­po­ra­tion (ONGC) and Oil In­dia. The fields are lo­cated both on­shore and off­shore, ac­cord­ing to the sources. The Direc­torate Gen­eral of Hy­dro­car­bon (DGH), a unit of the oil min­istry, has sug­gested these state com­pa­nies form joint ven­tures with pri­vate firms, in­clud­ing for­eign ma­jors that have long eyed these fields, the sources said.

The Cab­i­net might ac­cept the new pol­icy by De­cem­ber, said one of the sources, a gov­ern­ment of­fi­cial. The Direc­torate Gen­eral of Hy­dro­car­bon has also pro­posed the state-owned com­pa­nies en­act tech­ni­cal tie-ups with pri­vate firms, of­fer­ing to give them an as­sured rate of re­turn if the out­put in­creases be­yond a cer­tain level, the five sources said.

Af­ter the dis­cov­ery of the Bom­bay High oil­fields in 1974 and Bassein gas fields in 1976, ONGC has not been able to bring any new ma­jor fields into pro­duc­tion in the last three decades. In­dia has failed to draw in­ter­est from global oil ma­jors in li­cens­ing rounds since 1990 even though the fis­cal terms were eased. How­ever, Royal Dutch Shell and BP later bought stakes from firms that had won drilling rights.

An­other of the sources, an Oil and Nat­u­ral Gas Cor­po­ra­tion ex­ec­u­tive, said that the gov­ern­ment’s move to in­vite pri­vate firms in the ma­ture oil fields will im­pact their long-term plans. “We look at the blocks from a long-term ba­sis... in­ter­nally, the com­pany is not keen on the move as it can dis­rupt the cur­rent plan­ning and pro­duc­tion tar­gets over the long term,” the ex­ec­u­tive said, speak­ing on the con­di­tion of anonymity since he is not au­tho­rised to speak to jour­nal­ists.

A third source, also with Oil and Nat­u­ral Gas Cor­po­ra­tion, said that the com­pany would pre­fer to share rev­enue with the new part­ners for the in­cre­men­tal pro­duc­tion but not for the en­tire out­put from the fields. A spokesman for ONGC de­clined to com­ment. DGH Di­rec­tor Gen­eral Atanu Chakraborty too de­clined to make any com­ment.

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