The state-owned Oil and Natural Gas Corporation (ONGC) is planning to invite bids for service contracts to operate its idle marginal and isolated fields. The proposal, which was mooted at a recent board meeting of the corporation, has been accorded in-principle approval. These contracts will be different from the production-sharing contracts for discovered fields under which bidders are given equity in the fields.
In the first phase, ONGC is expected to offer 45 of its 96 discovered but unexploited fields.
The bidders will be allowed to inspect the geological data of these fields and will be given a baseline production target. Any incremental production over the baseline will be shared between ONGC and the bidder.
Under this Iranian model of contact, the corporation will not offer any equity in the field to the bidder. The bidder will only get a share of the incremental production. The fields and the production will be fully owned by ONGC.
Officials clarified if a bidder failed to maintain the production at the baseline level, he would be liable to pay heavy damages to ONGC. According to officials, ONGC is expecting an encouraging response to its offer from small exploration and production companies, service contractors and engineering, procurement and construction contractors.
Of the 96 marginal idle fields, 53 are offshore and 43 onshore. ONGC estimates in-place oil and condensate to be more than 200 million tonnes and gas to be more than 120 billion cubic metres.
Sources point out ONGC may encounter some resistance from its own staff because these fields are managed by workers of the corporation who can be rendered surplus if the management is handed over to private firms.
