A group of experts recommended handing over 66 producing oil and gas fields of national oil companies (NOCs) to private companies even though its own findings had showed that the latter had performed much worse in both exploration and production in the last five years.
The 'High-powered Committee on Enhancing Domestic Oil and Gas Exploration' concluded that while production of crude oil by NOCs remained "largely stagnant from 2013-14 onwards" at 25.6 million tonnes, output from fields operated by private companies fell by 16.5 per cent during the same period. "Oil production from production sharing contracts (signed with private companies) after reaching the highest production of 12.1 million tonnes in 2013-14 has now reduced to 10.1 million tonnes in 2017-18," says the committee's report.
The private operators' performance was even shoddier in natural gas extraction.
"Whereas production from nomination regime (blocks with national oil companies) has remained almost stagnant at 25-26 billion cubic metres (BCM), production from PSC regime has rapidly declined to 6.8 BCM in 2017-18 which is the lowest since 2004-05," says the findings.
The private companies had touched a peak of 26.8 BCM in 2010-11. The Committee - chaired by Vice-Chairman of NITI Aayog and comprising Cabinet Secretary, Petroleum Secretary, Economic Affairs Secretary, NITI Aayog CEO and Chairman of Oil & Natural Gas Corporation (ONGC) - found the private companies to be below NOCs on recovery of crude oil from in-place reserves. While ONGC's average recovery factor was 29 per cent and that of Oil India Ltd (OIL) was 31 per cent, blocks operated by private companies under the production sharing contract extracted just 22 per cent of the in-place reserves. The latter fared marginally better in natural gas fields, producing 59 per cent of the reserves compared to 57 per cent by ONGC and 56 per cent by OIL. The expert panel found that profit petroleum - paid by private operators after deducting costs under the production sharing contract regime - nearly halved to Rs 5,960 crore in 2017-18 compared to Rs 11,346 crore in 2013-14.
"The share of profit petroleum in overall revenue of the government during last five years has been to the tune of 2.2 per cent, declining from a high of 4.6 per cent to 1.3 percent in 2017-18," says the report. However, despite these findings, the expert panel relied more on the capability of the private sector which, it said, required a shift from Business as Usual approach.
It recommended moving from revenue-maximisation to production-maximisation for the private sector as well as NOCs handing over 66 discovered fields to private players. Based on its advice, the Cabinet last February directed ONGC to bid out 64 fields and OIL two fields to "new operators" without charging any past costs for their discovery or development efforts.