India to Invite Bids for 67 Small Oil, Gas Fields from Wednesday
India’s oil ministry has invited bids for small oil and gas fields under the Discovered Small Field Policy.
The ministry will officially launch the bidding process on May 25, 2016 in New Delhi. Discovered Small Field Bidding Round – 2016 will be presided over by India’s oil minister Dharmendra Pradhan.
Under the Discovered Small Field Policy, the government is offering 67 discovered small oil and gas fields clubbed into 46 contract areas spread over nine sedimentary basins in onland, shallow water and deep water areas for bidding which have known hydrocarbon discoveries.
These fields have been discovered by India’s national oil companies and are now being offered under exclusive policy which is based on easy to administer revenue sharing contract model, the oil ministry said in a statement published Tuesday.
The contract areas contain more than 85MMT of in-place volume of reserves, the ministry added.
There will be a revised business model under revenue sharing contract. It will involve international competitive bidding with no mandatory domestic participation. There is no mandatory prior technical experience required for the bidder nor is there any mandatory work program. There will be no cess, and minimal royalty is in line with earlier New Exploration Licensing Policy.
Goods and services imported for petroleum operations will be exempted from custom duty. The investors will not only get an opportunity to enter in Indian upstream market but will also experience freedom for pricing and marketing of crude and gas on arm’s length basis. There will be no restriction on exploration during the contract period.
The government is planning road shows in India and abroad to attract investors for the bidding round.
A successful auction of the small oil and gas fields is seen as crucial to a recently announced hydrocarbon policy, which India hopes will unlock energy resources worth $40 billion by simplifying rules and offering pricing incentives.
In March this year, India announced a new hydrocarbon exploration policy. The cabinet also announced a policy for future which provides for a uniform licensing system to cover all hydrocarbons such as oil, gas, coal bed methane, shale gas, shale oil, etc. under a single licensing framework, Hydrocarbon Exploration and Licensing Policy (HELP).
The government believes the new policy regime will mark a generational shift and modernization of the oil and gas exploration policy. It is expected to stimulate new exploration activity for oil, gas and other hydrocarbons and eventually reduce import dependence.
India is among the largest consumers of energy and has been overwhelmingly reliant on imports to meet local demand as domestic output has been sliding in recent years. Domestic gas production witnessed a decline of 17 percent in two years from 40.66 bcm in 2012-13, it fell to 33.65 bcm in 2014-15.