Petroleum Minister Dharmendra Pradhan on Tuesday put state-owned ONGC and OIL on notice saying oil and gas reserves they hold need to be monetised through joint ventures with domain experts or the government will take them away and auction them.
Speaking at BNEF Summit, he said state-owned firms cannot indefinitely sit on resources when the nation is a net importer of oil and gas.
Despite India bidding out acreages to private and other companies since the 1990s, Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) hold a "sizeable number of acreage for years," he said.
"We have asked them to do two things - do it yourself, (produce oil and gas) through some joint venture (with domain experts and foreign companies) (and) through a new business model.
"But the government cannot permit you to hold resources for an indefinite time," he said.
ONGC and OIL, which discovered and brought to production all of India's eight sedimentary basins, produce about three-fourths of the nation's oil and gas.
The two, especially ONGC, have faced criticism ranging from not being able to quickly bring discoveries to production to lower recovery.
Pradhan said India needs energy for its ambitious economic growth agenda.
"We want to reduce import dependency. We want to monetise our own resources."
"So we have given policy guidance to our state-owned oil companies - either you do on your own through new partners and new economic model, (else) the government will after a particular period intervene and use its authority to bid out the resources," he said.
The government has already taken away dozens of small and marginal discoveries from the two firms and auctioned them in what is known as Discovered Small Field (DSF) rounds.
DSF offers pricing and marketing freedom to operators, something which ONGC and OIL do not have currently, constraining their efforts to monetise smaller discoveries.
But now Pradhan has indicated the government would not hesitate to take away larger idle discoveries and auction them to private and foreign players.
Earlier this month, the minister had stated that the Directorate General of Hydrocarbons (DGH), the oil ministry's technical arm, had the "full mandate" to identify unmonetised major fields that could be offered for bidding.
"Resources don't belong to a company. They belong to the nation and the government.
"They cannot lie with a company indefinitely. If somebody cannot monetise them, we will have to bring a new regime," he had said on June 10.
The statement comes weeks after his ministry told ONGC to sell a stake in producing oil fields such as Ratna R-Series in western offshore to private firms and get foreign partners in KG basin gas fields.
PTI had on April 25 reported a seven-point action plan, 'ONGC Way Forward'.
It was drawn by the ministry that called for the firm to consider a sale of a stake in maturing fields such as Panna-Mukta and Ratna and R-Series in western offshore and onshore fields like Gandhar in Gujarat to private firms while divesting/privatizing 'non-performing' marginal fields.
It wanted ONGC to bring in global players in gas-rich KG-DWN-98/2 block where output is slated to rise sharply next year, and the recently brought into production Ashokenagar block in West Bengal.
Also, identified for the purpose is the Deendayal block in the KG basin which the firm had bought from Gujarat government company GSPC a couple of years back.
This proposal is the third attempt by the oil ministry to get ONGC to privatise its oil and gas fields.
In October 2017, the DGH had identified 15 producing fields with a collective reserve of 791.2 million tonnes of crude oil and 333.46 billion cubic meters of gas, for handing over to private firms in the hope that they would improve upon the baseline estimate and its extraction.
A year later, as many as 149 small and marginal fields of ONGC were identified for private and foreign companies on the grounds that the state-owned firm should focus only on bid ones.
The first plan could not go through because of strong opposition from ONGC, sources aware of the matter said.
The second plan went up to the Cabinet, which on February 19, 2019, decided to bid out 64 marginal fields of ONGC. But that tender got a tepid response, they said.
The sources added that ONGC was allowed to retain 49 fields on the condition that their performance will be strictly monitored for three years.
ONGC produced 20.2 million tonnes of crude oil in the fiscal year ending March 31 (2020-21), down from 20.6 million tonnes in the previous year and 21.1 million tonnes in 2018-19.
It produced 21.87 billion cubic meters of gas in 2020-21, down from 23.74 bcm in the previous year and 24.67 bcm in 2018-19.
Photograph: Amit Dave/Reuters