ONGC and Oil India Gear Up To Bid For Marginal Fields

As Government of India cleared the new Marginal field policy, under which government is all set to auction 69 marginal fields discovered by ONGC and Oil India to outside companies, interestingly ONGC and Oil India are also got interested. Actually these marginal fields are those fields that are allotted to these companies under various NELP round by the government in 90s and companies found marginal oil in these fields which at that moment was not cost effective to be drilled out. These fields remained there with these companies for so many years without any head start but now government has changed policy to augment investment into oil and gas sector. Under the new Marginal field policy these fields will be auction to various bidders in a transparent bidding and there is a freedom for price decision for the oil and gas that will be extracted from these fields.

This pre condition has raised the interest of private companies into these fields as freedom of deciding price of crude and gas will help them to improve their margins and recoup cost. Actually these fields have not been exploited because of “isolated locations, small reserves, high development costs, technological constraints and fiscal policy.” As per the policy new revenue sharing method will be implemented for these marginal fields, which is a great relief for the explorers who were quiet disturbed by controversial profit sharing method. Also, “new policy for marginal fields allows the successful bidder to sell at the prevailing market price of gas, instead of at an “administered” price.”

This is really a great impetus for the explorers. With such benefits ONGC and Oil India are also now become interested in these fields and are all geared up to take part in auction. ONGC CMD DK Sarraf told DSIJ recently that with such “lucrative condition and freedom” any company will be eager to bid for such marginal fields and we may also take part in auction. Same is the case of Oil India who is deliberating about its option and may bid for these auctions in a big way to take benefits of this new policy.

Interestingly, though these fields have been discovered by these PSUs but they won’t get any royalty on the same as these had been allotted by government to them and now they are give them back.