Indian Govt. To Consult ONGC, OIL Before Auctioning Fields

The government will reportedly consult Oil and Natural Gas Corp (ONGC) and Oil India Ltd. (OIL) before taking away their discovered small fields for next round of auction to private players, in a bid to avoid row between state firms’ executives and the Oil Ministry officials as has happened in the past. The government auctioned 67 discovered small fields in the first round in 2016, and is preparing to launch the second round soon with 60 fields on offer. The selection of fields for the second round by the Oil Ministry officials invited complaints and criticism from senior ONGC executives who didn’t want some of their fields included in the auction since they already had prepared development plans for those.

The differences of views between officials and company executives ran deep, resulting in verbal clashes, at times, between ONGC executives and officials of the Directorate General of Hydrocarbons (DGH), the Oil Ministry arm that prepared the list of fields for auction.

The government now plans to have a panel comprising senior Oil Ministry officials, the chief of DGH, and chairmen of ONGC and Oil India, to pick discovered small fields for the next rounds as and when they happen.

New incentives for exploration

The 67 fields offered in the first round of auction were discovered by ONGC and Oil India but not developed for years. The government took these away from the state firms and auctioned them under a new policy that allows contractors the freedom to market natural gas and cuts out bureaucratic micromanagement by introducing revenue sharing between companies and the government. With new incentives in place, ONGC and Oil India thought it attractive to bid for some of these fields but a government directive prevented them from placing any bid. But in the second round, the government is likely to allow ONGC and Oil India to participate as any other state or private firm.

Some of the leftovers of the first round of small field auction, some relinquished fields from the previous auctions for major fields, and a few fresh fields from ONGC and Oil India make up the 60 fields that would be offered in the second round of discovered small field auction. The ministers for finance and oil will together decide on the award of contract based on the recommendations of the Empowered Committee of Secretaries (ECS). Earlier, the award of contracts needed Cabinet’s nod. Empowered Committee of Secretaries, comprising oil secretary, expenditure secretary and law secretary, will finalise and approve key documents for the award of contracts such as revenue-sharing contract and notice inviting offer for the second round of auction.