New Delhi, May 24 (IANS) The first auction process for hydrocarbons exploration under a new revenue sharing contractual model will be launched here on Wednesday for 46 small oil and gas fields by Petroleum Minister Dharmendra Pradhan, an official statement said.
"Discovered Small Field Bidding Round-2016 will be launched on 25th May, 2016 in New Delhi.
"Under the Discovered Small Field Policy, the government is offering 67 discovered small fields in 46 cContract areas spread over 9 sedimentary basins in on land, shallow water and deep water areas for bidding," said a petroleum ministry statement.
The ministry, through a newspaper advertisement on Tuesday invited bids for the auction, where companies can bid for multiple exploration blocks. The deadline for submitting bids is October 31.
Of the 46 small fields, 26 are on land, 18 offshore in shallow water and two in deep water, the statement said.
This first auction of small oil and gas fields since 2010 were announced last year for being awarded as per contracts that will now be based on a revenue-sharing model, as opposed to the existing cost-and-output-based norms.
The new revenue sharing model will replace the controversial production sharing contracts (PSCs) - by which oil and gas blocks are awarded to those firms which show they will do maximum work on a block - that has governed the bidding under the earlier nine New Exploration Licensing Policy (NELP) rounds.
The PSC regime, which allows operators to recover all investments made from sale of oil and gas before profits are shared with the government, was criticised by India's official auditor, who said it encouraged companies to keep inflating costs - "gold plating" - so as to postpone giving higher share of profits.
The change in model is designed to help keep the government share in cases of windfall from both steep rise in prices as well as quantum jump in production.
The small fields up for auction have been surrendered by state-run explorers of Oil and Natural Gas Corporation, which they found uneconomical to develop in view of small reserve size and high economic cost.
Cumulatively the surrendered fields hold about 50.8 million tons of oil and 53.45 billion cubic meters of gas. The biggest discovery is D-18 in the Mumbai offshore that holds 14.78 million tons of oil reserves.
Fitch group firm India Ratings and Research (Ind-Ra) has said the new marginal fields policy, with a revenue sharing mechanism and market prices for output, would shift the key risks to developers.
