Government to give Unified License to winners of Marginal Oil & Gas Fields Auction

The 69 fields are estimated to hold about 51 million tons of oil and 53 billion cubic meters of gas. Out of these, 27 are in Mumbai Offshore region while another 15 are in the Krishna Godavari basin.

The government is planning to give a free hand to winners of the auction of marginal oil and gas fields. Winning bidders will be given unified licenses, which give them the right to produce conventional oil & gas as well as unconventional resources like shale oil & gas. In addition to this, the government is also offering pricing and marketing freedom to the developers.
 
The 69 fields are estimated to hold about 51 million tons of oil and 53 billion cubic meters of gas. Out of these, 27 are in Mumbai Offshore region while another 15 are in the Krishna Godavari basin. The biggest block which is being put up for auction holds about 29% of the total reserves of the 69 blocks.
 
Government is also trying to group adjacent blocks to reduce the total number of blocks going under the hammer. Till now, this number has been reduced to 48 and is further expected to go down to around 40. Both ONGC and OIL, which have surrendered 63 and 6 fields respectively, will be reimbursed by winning bidders after successful closure of the auctions.
 
The new operators will be allowed to explore their blocks for a period of 20 years. After winning the rights, developers will have 3 years to begin production. The timeline for starting production from the more complex deep-sea fields is 6 years. An important change has been made in the new policy, which allows exploration in the area, where discoveries have already been made. This was not the case earlier where exploration had to be stopped as soon as a discovery was made in the block.

The winners of the unified license will also have deal with new revenue sharing model, where bidders are required to quote the revenue they will share with government, at both lower as well as higher end of production band. This is in stark contrast with the earlier contracts, where developers were allowed to recover their investments, before any profits were shared with the government. Though the government did accuse developers of inflating costs to reduce the revenue available for sharing, the developers have long been denying it.