Indian multinational oil and gas firm Oil and Natural Gas Corporation (ONGC) is set to auction more than 60 of its discovered small and marginal fields to private companies.
ONGC will shortly auction the fields under the production enhancement contracts (PEC) mechanism, followed by global energy firms to increase production from mature oil fields.
In January, the Indian Government allowed ONGC to bring in the private sector for increasing production in order to better utilise its hydrocarbon resources and reduce reliance on foreign oil.
Global advisory services company KPMG has secured the mandate to run the PEC process for ONGC.
LiveMint quoted a person familiar with the development as saying, “PEC is a priority as the government is attributing an enormous amount of importance to it. Besides, stagnating domestic production of oil and gas is a major concern. So, as a consequence of that, ONGC has decided to offer its hydrocarbon blocks to other explorers.”
The small and marginal fields contribute just 5% of ONGC’s total production while the remaining production comes from 60 large fields.
The government-mandated price of $3.69 per million British thermal units for the period between April and September 2019 is considered uneconomical for development of Marginal fields. This is below the cost of production for most fields to be given for PEC.
Field operations could be outsourced to private or foreign companies that offer the highest revenue or production share over and above a baseline production.
ONGC has discovered six out of the seven oil and gas producing basins in India. It has has established 8.70 billion tonnes of in-place hydrocarbon reserves.
Capable of producing more than 1.26 million barrels of oil equivalent a day, the company owns one-tenth of the total Indian refining capacity.
