Calcutta, Dec. 10: Oil and Natural Gas Corporation (ONGC) is set to hand over operatorship of more than 80 small and marginal loss-making oil fields to private sector companies.
Sources said the fields will be handed over in phases on service-contract basis, which means the ownership will remain with ONGC.
“This will be purely a business deal. The private operators, who will be chosen on the basis of their abilities to operate an oilfield, can make the fields viable due to lower overheads and liabilities,” they said.
The process of handing over the fields will be done in phases.
“In the first phase, over 40 such fields will be given to private players on service-contract basis within a short period of time. The remaining fields will be given at a later period,” they said.
The exploration major has plans to invite expression of interest from private operators for these fields.
The sources noted that the financial details of these deals would be worked out in such a manner so that both ONGC and the private operators benefit. “It is possible that ONGC will give bonus to private operators for every incremental output, while a fixed service charge will be provided as per the agreement,” they added.
Sources have, however, declined to comment if there would be any penalty clause in the agreement in order to force the private companies to stick to the output target set out by ONGC.
“There should be something in the agreement so that both the owner and the operators of the fields meet the agreed commitment,” they said. ONGC board is believed to have cleared the proposal along with a modified product-sharing contract.
ONGC has over 80 category-I small and marginal fields, which would be farmed out in phases. Sources said the category-I fields are those where hydrocarbon presence is established.
Earlier there were plans to close down some of these fields on account of heavy losses and declining production on one hand and increasing overheads on the other.