The Ministry of Petroleum and Natural gas is likely to reimburse Oil and Natural Gas Corporation almost Rs 850 crore (Rs 8.5 billion) for the cost of exploration and development work in pre-NELP oil fields in the past.

In 1992, the government had offered some of the medium- and small-size fields discovered by ONGC, for development and production by joint venture companies, comprising ONGC and the Oil Indian Limited.

The government had signed 17 contracts under the first offer in 1993-94 and 11 contracts under the second in 1996.

The reimbursement will be made from ONGC's contribution of profit petroleum to the government, from the company's other blocks producing oil and gas, the petroleum ministry has said.

In a Cabinet note, the ministry has said ONGC has been asking for reimbursements of the costs it incurred in discovering hydrocarbons in the fields that were offered to the joint ventures.

"Under the discovered field policy, signature bonus and production bonus payable to ONGC and OIL were to be bid for by the private companies interested in the fields. These were not enough to offset the actual costs incurred by ONGC and OIL," it states.

The Comptroller and Auditor General of India has also said the private companies did not offer full past cost compensation to ONGC and OIL.

One of the fields that was offered by the government is the Ratna R-series fields where production has been on hold for many years as the production-sharing contract has not yet been signed.

The petroleum ministry has suggested that for the 27 blocks, ONGC be reimbursed Rs 653.02 crore (Rs 6.53 billion), including taxes.