ONGC may bid for smaller fields to develop marginal oil and gas blocks

NEW DELHI: State-run Oil and Natural gas Corp ( ONGC) may bid for some of the smaller fields it earlier surrendered as unviable following the unveiling of a new government policy to develop marginal oil and gas blocks.

The government plans to auction 69 marginal fields this fiscal year under a new policy that allows producers to sell gas at market price; share revenue, not profit, with government; and explore all forms of hydrocarbon with just one license for the block.

These blocks include 63 discoveries made earlier by the ONGC, which didn’t develop these blocks citing their unviability. But with pricing freedom given to the potential operators of the marginal blocks, D K Sarraf, chairman of ONGC, said some of these blocks may be viable.

“They were not viable then. But with a new policy some of these may be attractive now. We will do the financial modelling again and wherever it’s financially viable, we will also bid,” Sarraf said.

ONGC would be competing with private oil companies to develop these fields. The government hopes to attract private and foreign bidders to the auction despite an oil price crash that has discouraged many firms from taking up new projects. A lower oil price has also resulted in a sharp reduction in the oilfield services rates, bringing down field development costs and might spur investments in some cases.