Govt to monetise 22 ONGC marginal fields
With global crude oil prices touching a record high, the government has begun an exercise to monetise 22 marginal oilfields of Oil and Natural Gas Corporation (ONGC). The marginal field policy, model contract and bidding procedures are being fine tuned on the basis of investor feedback.
The marginal fields will be given on service contracts with a variable scale of production sharing to enable the contractor to recover investments in the initial stages.
As per the government’s appraisal, a field may be termed marginal if it is part of a block awarded to national oil companies (NOC) on nomination basis and any discovery therein remains not exploited economically using current technologies based on existing government policies as applied to the size of the reserves.
Discoveries in fields awarded to NOCs on nomination basis, but not exploited for over a period of five years in case of offshore after discovery may also be classified as marginal fields.
The production of the marginal field has to commence within two years, while the development phase is expected to commence within six months. Though the maximum period of contract will be 10 years, it can be terminated earlier when production ceases, sources said. “If production continues beyond 10 years contract period will be re-negotiated,” they added.
To make marginal fields attractive to the bidders, the government may allow the contractor the freedom to market or utilise gas.
Currently, gas can be used only by contractor/ affiliate for power generation and as compressed natural gas for households or automobiles.
In this backdrop, the DGH has proposed a realistic evaluation of the reserves in the marginal fields and transparent evaluation criteria with simple contractual and fiscal terms.