State-run Oil and Natural Gas Corporation (ONGC) is betting high on the second and third round of auctions under the Open Acreage Licensing Policy (OALP) for petroleum blocks.
It has given a formal expression of interest (EoI) for seven areas in the second round and is in the process of doing so for discoveries in the Bay of Bengal region for the third round.
Also, it would be participating in the second round of Discovered Small Fields auction (DSF-II) that has already been launched. “Of the 13 areas for which companies have submitted EOIs, ONGC has shown interest in seven. We are keen on DSF-II also as the small field policies are more lucrative. The company might also look for some areas in OALP-III,” said a senior ONGC official.
OALP is designed to allow companies to carve out their own exploration areas, improving on gaps found in the earlier model. In the EoI stage, companies may carve out their area based on the National Data Repository. The second stage involves bidding and others can come in.
ONGC was criticised for its non-aggressive participation in the first round of OALP. Of the 55 blocks on offer, the Anil Agarwal-led Vedanta has got 41. The rest were shared between Oil India, GAIL, Hindustan Oil Exploration Company and Bharat PetroResources.
ONGC contributes 71 per cent of the country’s total oil production and 75 per cent of gas production, at 35.7 million tonnes and 32.65 billion cubic metres, respectively. For financial year 2018-19, it has readied capital expenditure of Rs 320.8 billion, about 56 per cent down from last year’s Rs 729 billion. Of the latter, Rs 369 billion was used for acquiring the central government’s stake in Hindustan Petroleum Corporation (HPC) and Rs 74.8 billion for the acquisition of GSPC assets.
Following this, the company has asked the government to change the process of allocation of crude oil, so that the company will be able to allot more to its new subsidiary, HPC. “We have requested the government to have a relook at the model of allocation of crude oil and gas,” said Subhash Kumar, director (finance).
Chairman and Managing Director Shashi Shanker said with the new gas prices in place from Monday, the company will be able to break even in this business. With its cost of production over $3.1 per million British thermal units (mBtu), the company was struggling to find revenue from the gas business, at sales of $3.06 per unit for the past six months. The government has raised the price by 10 per cent from October 2018 to March 2019; to $3.36 per mBtu. The price of natural gas from deepwater fields has been kept at $7.67 an mBtu for six months beginning October 1, as compared to $6.78 before.