Govt may allow ONGC to auction off marginal fields

The government may allow state-run ONGC to auction small and marginal fields that it has not found economical to develop, so that the discoveries in the fields could be brought into production.Oil and Natural Gas Corp (ONGC) has a total of 165 marginal fields, out of which 144 fields have either been put on production or are in the process of monetisation. The remaining 21 fields may be auctioned for development through an international competitive bidding (ICB) route, company sources said.These 21 marginal fields comprise of 5 oilfields (4 on land and one offshore), 14 gas fields (9 on land and 5 offshore) and two offshore oil and gas fields, which have been estimated to cumulatively hold crude reserves of 496,900 tons and gas reserves of 1.519 billion cubic meters.Marginal fields are the oil and gas discoveries made by national oil companies in blocks awarded to them on nomination basis, but have not been exploited on the ground of commercial viability of technologial constraints.The sources said the Petroleum Ministry is likely to approach the Cabinet Committee on Economic Affairs (CCEA) soon for approval of the new Marginal Field Policy (MFP) under which ONGC and Oil India can auction off a large number of marginal fields, where discoveries have been made but not monetised, for development.Of the 21 marginal fields of ONGC, Gujarat has 5, Rajasthan has one and 7 in Andhra Pradesh. The remaining 8 are in shallow water off the west coast. OIL has 14 marginal fields.Public and private companies will be invited to bid for development of these marginal fields, the officials added, saying successful companies will be asked to begin production from onland fields within three years and from offshore fields in five years.The companies developing the fields may either get a fixed fee for their efforts or may share the output with the state-run firms in a pre-decided ratio.The proposed policy also provides for the companies paying only half of the applicable royalty on crude oil and gas they produce while being completely exempt from payment of Rs 2,500 per tonne cess on oil.As per a draft version of the policy, discoveries made after May 1, 2008, in nomination blocks held by ONGC and OIL, would auctioned if production does not commence by April 2013 in case of onshore fields and by April 2015 in case of offshore fields, the sources added.