Proposal To Sell Gas And Oil Fields By DGH Severely Criticized By ONGC
Public sector company oil and natural gas corporation ONGC has sharply criticized the proposal of the Directorate General of Petroleum Regulatory Hydrocarbons DGH to sell the oil and gas field discovered. The company says that the DGH is offering private concessions to the private sector companies for production in these areas, if the same concessions are given to ONGC, it can also increase the production.
Commenting on DGH’s proposal, ONGC said that national oil companies should also get an opportunity to participate in this auction. ONGC says that government oil companies can also increase their production if they are given fiscal incentives as given to the private sector companies.
It may be mentioned that DGH has proposed to auction 60% stake in some oil and gas fields produced by ONGC and Oil India Limited. DGH has identified 15 oil and gas fields in production. In this, 11 fields were invented by ONGC and 4 by Oil India Limited. A total of 79.12 million tonnes of crude reserves and 333.46 billion cubic meters of gas reserves are estimated to be in these areas. DGH believes that handing over these sectors to private companies will increase production.
DGH has proposed in the policy that these areas will be handed over to the bidder who promises maximum investment and promises to give the highest share of his net revenue to the government.
The one who will pay fewer royalty rates, import duty on capital goods on the basis of Hydrocarbon Exploration and Licensing Policy (HELP), and remain exempt from the oil cess will receive 60% net sales process from the 4th Year post-production and will get 60% equity in the field and will.
ONGC has also inquired about the mathematical calculations, which is used by the DGH including current recovery rate, cut-off reserve volume, average production decline, exploitation rate to identify total 15 fields. The company also stated that proximity to market, price, and crude oil quality, which are techno-commercial factors should also be taken into consideration before giving it away to the private players. There should be scrutiny carried by the state government on the related deal and it should be inspected if there will be acceptance of royalty payment reduction without cess.
ONGC also suggested that the perk such as 60% of net proceeds from sales to the bidder should be applicable only when output is raised above the predefined margin of base profile.