Allowed: National Companies to pick foreign expertise
Additional incentives for difficult fields
Additional incentives for difficult fields
India is to allow upstream operators Oil and Natural Gas Corp (ONGC) and Oil India Ltd to pick foreign expertise for enhancing exploitation of hydrocarbon resources.
Petroleum Minister Dharmendra Pradhan gave ONGC and Oil India freedom to get in partners for petroleum mining to increase production.
He also gave special incentives, making discoveries in difficult area viable.
Speaking at the launch of second bid round for 14 exploration blocks under open acreage licensing policy, the Minister ONGC, already an international player in upstream sector, and Oil India were free to select foreign partners.
International petroleum miners have stayed away from India for lack of commitments seen in India to drill wells especially during low crude oil price period.
India has been trying to get foreign participation in the upstream sector since 2017.
Announcing additional incentives for exploiting hydrocarbon from difficult areas, Pradhan said the motive is to enhance production as to earlier objective of maximizing revenue.
ONGC and Oil India have not been able to development some of the deep-water discoveries as the current US$3.36 per million British thermal units is way lower than the production cost.
The two Indian companies are expected to present production enhancement contracts soon for foreign or private companies to participate in the currently producing fields.
Since October 2017, the Directorate General of Hydrocarbon has identified 15 producing fields with combined reserves of 791.2 million tonne of crude oil and 333.46 billion cu metres of gas for the two national companies to private participation and enhance production.
The DGH also had identified 44 other fields of ONGC and Oil India for foreign participation to help increase production over a 10-year period.
Indigenous hydrocarbon production has not picked up in recent years.
Disappointingly, crude oil imports have increased to over 83% last year from 77% in 2014-15, as against the government’s target to reduce oil imports by 10% by 2022.
Meanwhile, Pradhan told parliament that a gross estimated revenue of Rs.45,000 crore is anticipated under Discovered Small Field Bid Round-II from 25 Contract Areas; and Rs.9,000 crore under Discovered Small Field Bid Round-I from 30 Contract Areas.
The gross estimated revenue is based on estimates of oil and gas hydrocarbon in place reserves, assumption in terms of hydrocarbon recovery factor, hydrocarbon sale price, etc., from 25 Contract Areas considering project life of 15 years.
However, actual revenue realization from these fields may vary based on actual award of Contract Areas; development strategy adopted by the contractor; actual production realized; and techno-economics of the individual field, etc.
The last date of bid submission under Discovered Small Field Round-II has been extended by one month to 18.01.2019, on account of requests received by the prospective bidders.
Under the DSF Policy, only those hydrocarbon discoveries of National Oil Companies which could not be monetized for a long period of time are offered for bidding.
The total gas accretion of ultimate reserves in financial year 2017-18 is 83.74 BCM and the total gas ultimate reserves established by the public/private sector oil companies in the country as on 1.4.2018 is 2,313 BCM.
Commercial production from most of the newly identified reserves is yet to commence as the time required for development of hydrocarbon discoveries varies from 3 to 8 years depending upon various factors such as location/size of discovery, availability of infrastructure facility besides other oil fields services.
Government has taken steps for development of gas based economy in the country which include plan for expansion in natural gas supply with the help of additional domestic gas production, expansion of Re-gasified Liquefied Natural Gas (RLNG) terminals in East and West coast of the country, nationwide gas grid including North Eastern States and policy initiatives for the promotion of use of natural gas, i.e., clean fuel by all sectors of the economy.
India’s domestic natural gas production was 31.86 billion cubic meters (BCM) in financial year 2015-16, 31.34 BCM in financial year 2016-17 and 31.91 BCM in financial year 2017-18.
Among others Pradhan listed developments:
Natural gas production from KG-DWN-98/2 Block is proceed to start by December 2019. The peak gas production rate is projected to be about 15 Million Metric Standard Cubic Metre per Day and the peak oil production rate is projected as about 78,000 Barrels of Oil per Day.
ONGC awarded the SURF (Subsea Umbilical Risers Flowlines) and SPS (Subsea Production Systems) package on 1st October 2018 at an award cost of about USD 1.65 billion.
This project envisages production of 25.87 million metric tonnes(MMT) of oil and 45.28 BCM of gas by 2035-36.
ONGC’s standalone production of crude oil (including condensate) and natural gas in 2018-19 (April, 2018 to November, 2018) is 30.464 million metric tonnes of oil equivalent (MMTOE) as compared to 30.701 MMTOE in corresponding period of previous year 2017-18 (April, 2017 to November, 2017).
ONGC is undertaking several steps to increase the production of oil/gas and has chalked out two-pronged strategy i.e. redevelopment of existing matured fields and development of new fields/marginal fields. Small/marginal fields, which were not viable on standalone basis, are being developed through cluster development concept. fiinews.com