Resolution-Marginal field policy
Resolution-Marginal field
policy
No. O-
19018/22-95-ONG.III: Many of the Marginal
oil and gas fields of Oil & Natural Gas Corporation Ltd (ONGC) and Oil
India Ltd (OIL) could not be monetized for years due to various reasons such as
isolated locations, small size, prohibitive development costs, technological
constraints, unfavourable fiscal regime, etc. On 2nd September,
2015, the Cabinet has approved the Marginal Field Policy (MFP) with the
objective to bring marginal fields to the production at the earliest so as to
augment the domestic production of oil and gas. Government has attempted to
include certain reforms in the hydrocarbon exploration and production
management through this policy with sole intention to increase the production
at the earliest. The salient features of this policy are given below:
Single license for conventional and non-conventional hydrocarbons
2. A single
license will be provided to enable E&P operators to explore and extract all
hydrocarbon resources covered under the Oilfields Regulation and Development
(ORD) Act, 1948, and Petroleum and Natural Gas (PNG) Rules, 1959 under one PEL/PML.
This will enable the contractor to explore conventional and unconventional oil
and gas resources including CBM, shale gas/oil, tight gas, gas hydrates and any
other resource to be identified in future which fall within the definition of
"Petroleum" and "Natural Gas" under PNG rules, 1959.
3. The
contractor will be allowed to carry out exploration activity during entire
contract duration. Exploration will be at the sole risk and cost of the
contractors.
4. Bids will
be invited for the Marginal Fields on a Revenue Sharing Contract (RSC) Model.
To ensure viability of operations, it is proposed to cluster fields /
discoveries, as may be required at the time of Notice Inviting Offer (NIO).
This revenue sharing model will be based on a revenue-based linear scale. The
contractor shall be required to pay biddable Government share of revenue
(net of royalty or post-royalty).
5. A simple
and easy to administer contractual model in line with Government's efforts to
promote 'Ease of Doing Business' requiring minimum regulatory burden for
monetizing these fields has been developed.
Crude Oil Pricing and Sale
6. The
contractor will be free to sell the crude oil exclusively in domestic market
through a transparent bidding process on arms length basis. However, for the
sake of calculation of Government revenue, the minimum price will be the price
of Indian Basket of Crude Oil (currently comprising of Sour Grade (Oman &
Dubai Average) and Sweet Grade (Brent Dated) of Crude Oil processed in
Indian refineries) as calculated by Petroleum Planning and Analysis Cell (PPAC)
on a monthly basis. If the price arrived through bidding is more than the price
of Indian Basket of Crude Oil then the Government's take will be calculated
based on the actual price realized.
Natural Gas Pricing
7. The
contractor will have freedom for pricing and allocation of gas produced from a
cluster / field / discovery on arms length basis. The Government share of
revenue shall be calculated as per the Domestic Natural Gas Pricing Guidelines
in vogue at relevant point of time. However, if the discovered price is more
than the calculation based on the Domestic Natural Gas Price Guidelines issued
by the Government from time to time, then the Government's take will be
calculated based on actual price realized.
Royalty
8. Royalty
rates applicable under New Exploration Licensing Policy (NELP) regime will be
adopted in the Policy for Marginal Field of ONGC and OIL.
9. No oil
cess shall be applicable on crude oil production from marginal fields.
Customs Duty
10. Exemption from
custom duty will be provided on all machinery, plants, equipments, materials
and supplies related to petroleum operations as applicable in NELP.
Mining Lease
11. Current Mining
Lease holder will be required to transfer/assign the Mining Lease (ML) or
Petroleum Exploration License (PEL) along with all available clearances to the
awardee of the area/ Contractor, to the extent legally possible, or else the
Contractor has to obtain the same. Lease / License rent / fees will be governed
as per ORD Act 1948 and P&NG Rules 1959 as amended from time to time.
Contract Duration
12. The contract
duration for development and production from the offered Marginal Fields would
be a maximum of twenty (20) years from the effective date (effective date is
the date of PEL/ML grant/ transfer /signing of deed) or till the economic life
of the field as submitted by bidder along with development plan in the bid,
whichever is earlier, unless the Contract is terminated earlier in accordance
with its terms, but may be extended upon mutual agreement between the Parties
for a further period not exceeding ten (10) years. If the production of Crude
Oil or Natural Gas is expected to continue beyond the end of the relevant
period referred above, the Parties may agree to extend this Contract for a
further period upon such terms as may be mutually agreed. The contract can be
extended based on the provisions of the contract and extant GOI guidelines, if
any. Contract can be terminated earlier by GOI if the production from the
offered Marginal Fields ceases for a period of over one (1) year at any
instance.
Management Committee
13. A Management
Committee (MC) will be constituted with representatives from Government/DGH and
contractor.
Eligibility for participation in bids
14. National oil
Companies, Indian Private Companies and foreign companies either alone or in
joint venture can bid for the offered marginal fields. Up to 100% participation
by foreign companies, joint ventures will be allowed.
15. The site
restoration fund shall be maintained by the contractor, as per the notified
"Site Restoration Fund Scheme-1999", as amended from time to time.
The activity of site restoration will be done as per applicable rules /
standards / notifications.
16. The above
policy will apply to 69 fields of ONGC and OIL considered under the marginal
field category. List of 69 fields is annexed.
The decision
herein contained will come into force with immediate effect and will remain in
force until further orders.
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