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BPCL, HPCL, IOCL, Sun Pharma entity win oil & gas field auction

BPCL, HPCL, IOCL, Sun Pharma entity win oil & gas field auction
India is the world's third biggest oil consumer. Photo by Reuters.
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State-owned refiners Bharat Petroleum Corp. Ltd (BPCL), Hindustan Petroleum Corp. Ltd (HPCL) and Indian Oil Corp. Ltd (IOCL) alongside a company floated by directors of drugmaker Sun Pharmaceuticals were on Wednesday declared as winners of the much-hyped small oil and gas field discovery auction.

The Cabinet committee on economic affairs, chaired by Prime Minister Narendra Modi, approved award of 31 fields out of the 34 that had received bids.

Bharat PetroResources Ltd, a unit of BPCL, won as many as four of the fields while HPCL’s subsidiary Prize Petroleum and IOCL walked away with three each.

Sun Petrochemicals Pvt, a privately-owned company formed by the directors of Sun Pharmaceuticals Industries Ltd, won the B-37 Cluster in Mumbai offshore, for which it was the sole bidder. It had bid for 6 out of the 46 fields that were auctioned last year.

At the close of the bids on 21 November last year, 34 areas were sought for, with 14 getting single bids.

The fields were taken away from state explorers Oil and Natural Gas Corp. Ltd (ONGC) and Oil India Ltd (OIL).

CCEA on Wednesday “gave its approval to award contract in 31 contract areas”, finance minister Arun Jaitley said after the Cabinet meeting.

All the 14 fields that received single bids were awarded.

Of the fields on offer, all the 26 onland areas had received bids, although 9 had only single bidders. Of the 20 offshore blocks on offer, only 8 received bids, 5 of which were single company offers.

Cairn India, which bid for two fields, returned empty handed. Hardy Exploration of the UK too was unsuccessful in its bid for one field. Adani Welspun won one field while Nippon Power Ltd got two.

The 46 fields offered in the bid round were made up of 67 oil and gas discoveries “surrendered” by the state-owned ONGC and Oil India Ltd on finding them commercially unviable to develop under price control regime.

ONGC as also Reliance Industries did not bid in the round. OIL, which too had surrendered unviable fields, bid for as many as 3 fields albeit in consortia with companies like HOEC, Prize Petroleum (upstream unit of HPCL), Oilmax Energy and IOC. It won one field.

Other fields were awarded to smaller and lesser known companies.

An official statement said the fields awarded were discovered long ago, but these discoveries could not be monetised due to various reasons such as isolated locations, small size of reserves, high development costs, technological constraints and fiscal regime.

“For early monetisation of these fields, in September, 2015, the Cabinet approved 69 marginal fields for offer under discovered small fields policy,” it said.

The bids closed on 21 September last year with a total of 47 companies submitting their applications.

The fields have been awarded under the new regime of revenue sharing model.

“Award of contract is expected to provide faster development of fields and facilitate production of oil and gas, increasing energy security of the country,” the statement added.

“It is expected that in-place locked hydrocarbons volume of 40 million tonne oil and 22 billion cubic metres of gas will be monetised over 15 years. The production from these contract areas will supplement the domestic production.”

 

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