The Cabinet on Wednesday approved the auction of 69 small and marginal oil fields of state-owned ONGC and Oil India to private and foreign firms as a precursor to a full-fledged licensing round.
The Cabinet Committee on Economic Affairs (CCEA), headed by Prime Minister Narendra Modi, approved auctioning of the fields because they were uneconomical to develop due to government’s subsidy sharing mechanism.
So far, 254 blocks for exploration and production of oil and gas have been auctioned in nine rounds of New Exploration Licensing Policy (NELP) since 1999. These have been on production sharing basis where profit is shared with the government after recovery of cost.
ONGC has surrendered 63 discovered oil and gas fields which it had found uneconomical to develop considering small reserve size and high economic cost as it had to pay for fuel subsidies from the hydrocarbons produced from it. Oil India Ltd (OIL) has surrendered six such fields.
