Petroleum Sector Current Affairs - 2020
The Union Cabinet has approved second round of Discovered Small Field (DSF) auctions under Discovered Small Field Policy. The auction will offer total of 60 discovered small fields/un-monetized discoveries with an estimated 194.65 Million Metric tonnes of oil.
Of the 60 fields, 22 fields belong to Oil and Natural Gas Corporation (ONGC), 5 to Oil India Limited (OIL), 12 are relinquished discovered fields from New Exploration and Licensing Policy (NELP) blocks. It also includes 21 fields that did not receive any investor interest in first round of DSF (i.e. DSF I).
The Empowered Committee of Secretaries (ECS) comprising of Secretary (Petroleum & Natural Gas), Secretary (Expenditure) and Law Secretary will finalize and approve Model Revenue Sharing Contract, and other documents for DSF Round-ll. The award of contract will be approved later by Minister of Petroleum and Natural Gas and Minister of Finance based on the recommendations of ECS.
These fields will be developed and monetized faster. It will augment production of oil and gas leading to enhance energy security of the country. The investments into these fields will lead to estimated generation of over 88,000 jobs as direct, indirect and induced employment. This policy will be also extended for future round of bidding.
The Union Ministry of Petroleum and Natural Gas had launched first round of DSF in May 2016 under new liberalized DSF policy. Under it, 46 contract areas consisting of 67 fields spread across 9 sedimentary basins were auctioned. The auctions had witnessed 134 e-bids for 34 contact area. Later, 22 companies were shortlisted for 31 contract areas of which 15 companies were new entrants with no prior experience in the sector.
Tags: Business • Cabinet Decisions • Discovered Small Field • Discovered Small Field Policy • Economy
The Union Government and state-run oil explorer ONGC clinched deal for acquisition of government’s 51.11% stake in Hindustan Petroleum Corporation (HPCL) for a consideration of Rs. 36,915 crore. The deal will be closed by end of January 2018. Earlier empowered panel headed by finance minister Arun Jaitley had approved price bid for acquisition. The all-cash deal will help government boost its non-debt capital receipts and meet disinvestment target (Rs 72,500 crore).
Through this acquisition, ONGC is gaining midstream and downstream presence and access to marketing network. This acquisition will make ONGC India’s first vertically integrated oil major, having presence across value chain in sector. The integrated entity will have advantage of having enhanced capacity to bear higher risks, take higher investment decisions and neutralising impact of volatility of global crude prices. As for HPCL, deal will help it in further leveraging synergy at various levels of vertical value chains as part of integrated oil and gas group. It also will enable ONGC to mitigate risk of crude price volatility.
In 2017-18 Union Budget, Finance Minister Arun Jaitley had announced that state-run oil companies will be merged to create ‘oil major’. Following this Cabinet Committee on Economic Affairs (CCAE) in July 2017 had granted ‘in-principle’ approval to the strategic sale of HPCL to ONGC. This also included change in management control, but allowed HPCL to retain its brand as subsidiary of the national oil explorer.
During 2016-17, HPCL had turnover of Rs 2,13,489 crore and profit after tax of Rs 6,502 crore. It markets around 35.2 million tonne of petroleum products accounting for market share of about 21%and has around 15,000 fuel retail outlets. ONGC contributes around 70% of Indian domestic production of crude oil and natural gas.