Cabinet awards 31 oil blocks to 22 firms

In an investment push to the oil sector, the Union Cabinet has awarded 31 oil and gas exploration blocks (44 fields) to 23 companies, of the 46 contract areas put on offer under the discovered small and marginal fields (DSF) round of auction. 
This is likely to bring in a gross revenue of Rs 46,000 crore over a period of 15 years, of which the government’s share is likely to be Rs 9,600 crore. 
Blocks not cleared for awarding are likely to be put on offer during the second round of DSF. Of the 23 companies, about 15 are entrants to the sector.

 “Of the 31 contract areas awarded, 14 had only single bidders and 17 had multiple bidders,” Finance Minister Arun Jaitley told journalists.  The Directorate General of Hydrocarbons (DGH), arm of the petroleum and natural gas ministry, conducted the bidding and shortlisted the companies for award. After the Cabinet clearance, the companies would be signing contracts with Oil & Natural Gas Corporation and Oil India, original licensees of these blocks.  During the round that happened in November, 42 companies took part, 37 being private entities.  Forty six blocks got a total of 134 e-bids. These areas have estimated total reserves of 88 million tonnes of oil equivalent, which if produced could cut the country’s import bill by Rs 3,500 crore annually. These areas were discovered long before but could not be monetised for various reasons - isolated locations, small size of reserves, high development costs, technological constraints, fiscal regime, etc, went an official statement. For the blocks awarded, the expected in-place reserves are 40 million tonnes of oil and 22 billion cubic meters of gas, to be monetised over 15 years.    Among the players that won multiple blocks include Bharat PetroResources, Prize Petroleum Company, Pfh Oil and Gas, Indian Oil Corporation, KEI-RSOS Petroleum & Energy, Megha Engineering & Infrastructures, Ramayana Ispat, BDN Enterprises,  Duggar Fiber, Mahendra Infratech, Oilmax Energy,  Nippon Power and Hindustan Oil Exploration Company. On the other hand, the companies that got single blocks are Sun Petrochemicals, Adani Welspun Exploration, Vijayasri Bhaskar Industries, South Asia Consultancy Fze, Gem Laboratories, Oil India, Adbhoot Estates, EnQuest Drilling  and SKN Haryana City Gas Distribution.  “This time, the bidding criteria and the process has been extremely smooth for players, which resulted in a lot of start-ups entering the fray. For the first time in the oil industry, we are participating in an online bidding process, which was efficiently conducted by the DGH with the help of MSTC,” said P Elango, managing director of Hindustan Oil Exploration.  He said the revenue share bidding model had only three parameters — number of wells to be drilled, amount to be shared at lower revenue point and higher revenue point.   Though the government had conducted road shows in America, Britain, Canada, Singapore and UAE, only five foreign entities had bid. While all the 26 onland contract areas received e-bids, only eight of the 20 offshore contract areas did.

published in Business Standard , Kolkata Edition, Thursday, 16 February 2017