Bid to offer MNCs stake in oilfields
The government plans to allow global players to acquire stakes in discovered and ageing oil and gas fields of ONGC and Oil India to boost production and meet increasing domestic demand.
- Published 16.10.17
New Delhi: The government plans to allow global players to acquire stakes in discovered and ageing oil and gas fields of ONGC and Oil India to boost production and meet increasing domestic demand.
The cabinet note allowing private players to pick up stakes in the fields given to ONGC and OIL on a nomination basis would be considered by the council of ministers, a senior oil ministry official said.
ONGC produces 87 per cent of its 25.53 million tonnes of oil from fields given to it on a nomination basis. As much as 95 per cent of 23.28 billion cubic meters of annual gas production comes from the nomination blocks.
The nomination fields include Mumbai High, India's biggest oil field, and Bassein gas field, the nation's biggest natural gas producer.
The government is looking at private investment to raise domestic oil and gas production, which has stagnated for the last few years while fuel demand has been rising 5-6 per cent annually.
India needs the expertise of global players to raise production from its ageing oil fields and meet its goal of lowering crude imports by 2022, energy consultancy firm Wood Mackenzie said.
Neal Anderson, president of Wood Mackenzie, has said "opening up exploration has such a long lead time that it will not meet the five-year timeline".
The official announcement by oil minister Dharmendra Pradhan about a $300 billion investment opportunity in the energy sector is a clear indication that the government is taking steps to boost domestic production by roping in the expertise of global players.
ONGC had engaged service companies to raise output and had even offered incentives if production crossed targets. However, the move was not successful and the government now plans to invite global players.
Officials said this was one of the issues that the government placed before oil multinationals when their representatives met Prime Minister Narendra Modi.
The government has relaxed rules by allowing pricing freedom for oil and gas and a uniform policy to extract all hydrocarbons under a single license. It is also planning to auction bigger areas in the next auction of discovered small fields later this year.
Oil demand is expected to rise to 7.5 million barrels of oil per day by 2030 from 4.5 million barrels daily in 2015-16, taking its share of global demand to 6.8 per cent from 4.56 per cent.