Indian Marginal Field Auction

Indian Petroleum Minister Dharmendra Pradhan and senior oil ministry officials are showcasing marginal oilfields at the IHS CERAWeek Conference in Houston this week.  The proposed auction was first announced in January 2015 as part of the new Indian Marginal Field Policy aiming to stimulate the development of 69 fields surrendered by ONGC and Oil India Ltd, who will also be allowed to bid to re-license the blocks.

Information released by the Indian Ministry of Petroleum and Natural Gas (IMPNG) indicates that the fields collectively hold approximately 372 million bbl of oil and 1.9 trillion scf of gas, which they are eager to unlock. The biggest single oil discovery is D-18, located offshore Mumbai, containing 108 million bbl of oil reserves whilst the largest gas discovery on offer is ONGC’s B-9, in the offshore Kutch Basin, with in-place resources of 518 billion scf. Given the current market conditions, even the largest fields will require technology which can lower the production costs if they are to be brought on stream and maximise recovery.

We expect the timing and model contract for the auction to be determined by the interest generated at roadshows the Ministry are hosting, such as the one being held in Houston this week.  According to IndUS Business Journal, Pradhan has previously stated said that licences will be awarded to the companies who offer the maximum revenue share or percentage of oil and gas to the government and are committed to doing more work. Perhaps more importantly for the future of these fields, the Government need to attract companies who are willing to apply new technologies and development plans that are able to unlock these valuable assets.  We eagerly await the results of this week’s conference.