India will kick off an auction of 67 small oil and gas fields on May 25 that will test the response of investors to recent policy measures such as the revenue-sharing model and gas pricing freedom. The Directorate General of Hydrocarbons (DGH), the technical arm of the oil ministry, has announced on its website that oil minister Dharmendra Pradhan will launch the discovered small fields bid round on May 25 in Delhi.
“A total of 67 discovered small fields will be offered in 46 contract areas through the new revenue sharing model,” the DGH said in its notice inviting interested parties to register for the launch. Separately, the DGH has sought bids from consultants for promoting the auction at international roadshows meant to showcase fields to potential investors. It has also sought event managers for the roadshows.
The auction, the first in about five years in the country, comes after months of delay due to low oil prices, which officials feared may curb interest among potential bidders. Oil prices have dropped about two-thirds in two years, forcing many oil companies to shelve projects and cut jobs. Crude oil prices have increased about 50 per cent in the past three months to trade at about $46 a barrel on May 9 afternoon.
Last year, the government unveiled a new policy for 69 small fields that had remained undeveloped for years due to their limited reserves, high development cost and technological constraints. These fields were owned by Oil and Natural Gas Corporation and Oil India Ltd, before being taken away by the government for auction under the new policy. Two fields in the Northeast will not be part of the auction while the balance have been organised into 46 clusters to make them financially attractive as potential investors can build common infrastructure for these fields, keeping costs low.
The auction will test some of the key policy changes introduced by the government in the exploration and development sector such as marketing freedom for gas and revenue-sharing, instead of profit sharing, between the operator and the government. Ronnie Stanley JerseyShare This