Cabinet to Auction 69 Oil Fields; Rs 70,000 Crore to be Monetised
Cabinet approved auction of 69 small and marginal oil fields of PSU oil companies ONGC and Oil India
The Cabinet approved auction of 69 small and marginal oil fields of PSU oil companies ONGC and Oil India to private and foreign firms in the run-up to a full fledged licensing round. Rs 70,000 crore will be monetised after this decision, the oil minister later said at a press conference.
State-owned firms are surrendering these oil fields because they were uneconomical to develop due to government’s subsidy sharing mechanism.
The fields will be bid out on the basis of revenue share or the share of oil and gas a bidder offers to the government upfront, and work programme.
— Dharmendra Pradhan, Oil Minister
The minister said the revenue sharing model was being introduced for the first time in the oil sector. The gas produced will be sold at prevailing market price and there will be no restrictions on allocation.
So far, 254 blocks for exploration and production of oil and gas have been auctioned in nine rounds of New Exploration Licensing Policy (NELP) since 1999. These have been on production sharing basis where profit is shared with the government after recovery of cost.
ONGC has surrendered 63 discovered oil and gas fields while Oil India surrendered six.
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