ONGC quietly prepares to offer 64 fields as PECs

Vol 22, PW 17 (13 Jun 19) People & Policy

Despite protests, ONGC looks set to invite offers for 64 small to medium blocks under Production Enhancement Contracts (PECs) by end-July.

Well-placed sources at ONGC tell us this move follows orders from the oil ministry issued last month (May) on a directive from NITI Aayog, formerly the Planning Commission. "Our management is handing over data packages of the (64) fields to the DGH and the oil ministry," reports an ONGC source.

Still unclear is what role the DGH will play in the offer, except for a "supervisory role." Our source adds ONGC wants to ensure the accuracy of the data by getting reserves figures and production profiles certified by a third party consultant such as Gaffney, Cline & Associates or DeGolyer & MacNaughton.

Whether either consultant will have enough time to evaluate 64 assets within the ministry's timeframe to launch bidding by August 2019 is also unclear. Many at ONGC are uneasy at the prospect of losing control of the company's "family silver" which directors have been covertly opposing for the past two years.

Others take solace from the fact that ONGC will retain ownership of baseline (current) production under the proposed model where it cedes operator control to whoever offers the highest revenue share from incremental (increased) production. "Any new operator is free to market and fix a price to sell incremental production and share additional revenue with ONGC," we hear.