India auctions oil and gas fields after six year hiatus

India auctions oil and gas fields after six year hiatus

The Indian government has offered bids for 67 of its small oil and gas fields for commercial production after a six year hiatus.

The participating companies will be given a liberal and simple revenue sharing agreement, in additional to freedom on pricing and marketing of oil and gas, a discount on a 20 per cent tariff on crude oil production and zero customs duty on capital goods imported for development.

Many of these fields were returned back to earlier owners, the state-owned Oil and Natural Gas Corporation (NSE:ONGC) and Oil India Ltd (NSE:OIL) for their small, yet high cost of development.

“These fields have been discovered by India’s national oil companies and are now being offered under exclusive policy which is designed to be investor-friendly and is based on easy-to-administer revenue sharing contract model, in tune with the policy of ‘ease of doing business’ in India,” the government said in a statement.

In an attempt to attract well-funded firms and individual investors outside the hydrocarbon business, the government has eliminated a previous mandatory joint-venture operation with domestic firms.

The success of these auctions will foretell India’s new national hydrocarbon policy (HELP). The policy aims to unlock energy resources worth US$40 billion by offering price incentives and easing rules.