Bids for 69 marginal oil and gas fields to begin by Dec: Pradhan

Mumbai: Petroleum and Natural Gas Minister Dharmendra Pradhan Monday said the government will open the bids for 69 marginal oil and gas fields from late November or early December and expressed confidence of getting good response from across the globe.

"I expect a good response for the 69 fields as this is for the first time that we have allowed unified licence (it be gas, oil, shale gas or CBM) apart from revenue sharing (as against the existing practise of PSC) and complete freedom of marketing the produce at market prices. We hope to invite bid either by late November or early December for these blocks," Pradhan said after chairing a meeting of the parliamentary consultative committee of the oil ministry here.

Early this month, the government had put on block 69 marginal oil and gas fields, which have been pending for development since the 1970s. It expects to unlock Rs 70,000 crore worth energy reserves.

On September 3, the Cabinet had approved a new policy for auctioning 69 small and marginal oil fields to private and foreign companies bringing in a paradigm change in the way oil and gas blocks are developed.

The main highlight of the policy is revenue sharing instead of the present model of profit sharing and giving out unified licences for all hydrocarbons in the field instead of a licence per hydrocarbon could later be considered for the entire sector.

"We have made a paradigm shift from cost-recovery model to revenue sharing. At the same time, we have decided to implement unified licensing regime. This is a primary step towards ease of doing business," Pradhan had said while announcing the new policy.

Of the 69 fields to be put on the block, 63 are owned by ONGC and six by Indian Oil.

"The revenue sharing and royalty sharing mechanism with the government will be benchmarked against the prevailing market price of oil on the day. If the company sells at below this price, then the sharing will still have to be done at the market price. If the company manages to sell at a higher price than the market rate, then the sharing will be based on this higher price," he had added earlier.

The earlier profit sharing mechanism meant that the

government had to scrutinise various costs incurred by private companies, which often led to delays and disputes and allegations of private players gold-plating their costs.

Operators will also be allowed to sell gas or crude to any customer of their choice at market price and not be bound to the government's allocation policy.

The meeting was also attended by the Minister of State for Parliamentary Affairs Rajiv Pratap Rudy.

Rudy said it has been decided to recommend the seven oil and gas PSUs to skill as many as 10 million unskilled/semi- skilled work force in the industry over the next five years so that petrol pumps could double up as payment banks.

The objective is skilling and employment generation, Rudy added.

Pradhan said the meeting asked oil marketers to increase the number of filling stations by 10,000 to 63,800 this fiscal year.

With re-entry of private retailers like Reliance, Essar and Shell, the government expects the total number of fuel filling stations to increase by 32,000 over the next 10 years.

On LPG, Pradhan said the ministry has set a target of increasing the cooking gas penetration to 75 percent over the next four years from 55 percent now, and to achieve this online filing of new connections will be promoted and encouraged.

He also said, as many as three million people out of the 15 million active LPG users of the total of 18 million connections, have given up their subsidy so far.

As part of the clean and green initiatives, oil PSUs have been actively promoting use of ethanol in petrol and dio-diesel. These initiatives will help in connecting the farmers with direct economic activity and cash flow.

Pradhan also said the government will be promoting active CNG use in the large cities. Towards this, the government will be building green highways between Mumbai and Pune, in and around Bangalore, and in the Delhi-Mathura-Agra-Japiur- Haridwar-Chandigrah belt, which will ensure that motorists can fill up CNG on these stretches.