The Ratna and R-series oil fields, 130-km off the Mumbai coast, hold an estimated 87 million barrels of oil and 1.2 billion cubic metres of gas reserves.
New Delhi: The government Thursday cancelled award of Ratna & R-Series oil and gas field to Essar Oil and Amguri oilfield in Assam to Canada's Canaro Resources and revert them back to state-run Oil and Natural Gas Corp (ONGC).
The Cabinet Committee on Economic Affairs (CCEA), headed by Prime Minister Narendra Modi, decided to revert the fields to their original licensee after contract with Essar could not be concluded even after 20 years and the same with Canaro was terminated following the Canadian firm selling its stake without government consent.
Essar Oil and Premier Oil of UK was awarded the Ratna and R-Series oil and gas fields, lying 130 km off the Mumbai coast, in December 1996 but the production sharing contract (PSC) could not be signed due to differences of rates of royalty and other issues.
In 2010, the oil ministry had terminated the contract with Canaro as the Canadian company had not taken the government's consent to sell its controlling stake in the Amguri field and raise Rs 430 crore from Barbados-based Mass Financial Corp.
"The fields have been decided to be reverted to original license holder, ONGC," Oil Minister Dharmendra Pradhan said.
The Ratna and R-series oil fields hold an estimated 87 million barrels of oil and 1.2 billion cubic metres of gas reserves.
The medium-sized Ratna and R-Series (R&RS) fields have been languishing since 1993 when the then P V Narasimha Rao-led Congress government decided to invite bids.
The fields were awarded to a consortium led by Essar Oil in 1996. The Cabinet Committee on Economic Affairs (CCEA) in 1999 approved finalising and concluding PSC within six months after negotiations are held by the negotiating team of secretaries (NTS), but the same has not been signed till date over royalty and cess amount to be charged from Essar Oil and partners.
NTS held 20 meetings between November 1999 and June 2013 and kept setting targets for completion of negotiations and signing of production sharing contract (PSC), but it could not stick to its own targets for completion of the negotiations.
ONGC had discovered the fields and created facilities in Ratna R-12, which is part of R&RS, at a cost of Rs 472.55 crore. These facilities were used by the company for production since 1983 before production was stopped in September 1994 after the field was put up for auction.
These facilities have been deteriorating as a result of 'plundering and looting' of platform utilities and equipment. The estimated repair cost for the existing facilities would be Rs 1,085.70 crore.
CCEA on March 9, 1999, approved freezing of the rates of levy of royalty and cess prevailing at the time of the bidding (Rs 900 per tonne as cess and Rs 528 per tonne as royalty).
NTS in April 2005 wanted payment of statutory levies at current rates rather than those prevailing in 1995. Essar Oil and partners did not agree. The Attorney General concurred that PSC can be signed with old royalty rates.
A note was sent to CCEA in January 2008 and resubmitted in June 2008, but the Cabinet Secretariat returned seeking certain modifications/corrections on some deficiencies.
Another note was sent to CCEA on July 9, 2008, but the matter was re-examined by the Oil Ministry and it was decided that NTS should consider the matter once again with a view to analysing in detail the various alternatives available along with their financial implications. Thereafter, no final decision was taken.