The Union Cabinet on 2 September 2015 gave its nod for Policy for Marginal Fields (MFP) of Oil and Natural Gas Corporation (ONGC) and Oil India Limted (OIL).
Marginal Fields are those discoveries that could not be monetized for many years due to various reasons such as isolated locations, small size of reserves, high development costs, technological constraints, fiscal regime etc.
Key Features of Policy for Marginal Fields
• It is aimed at stimulating investment as well as higher domestic oil and gas production.
• 69 oil fields which have been held by ONGC and OIL for many years, but have not been exploited, will be opened for competitive bidding.
• Private sector will be allowed to play a bigger role in the development of marginal fields.
Changes in MFP vis-à-vis earlier policies
The earlier contracts were based on the concept of profit sharing. Under the profit sharing methodology, it became necessary for the Government to scrutinize cost details of private participants and this led to many delays and disputes. Under the new regime, the Government will not be concerned with the cost incurred and will receive a share of the gross revenue from the sale of oil, gas etc.
The licence granted to the successful bidder will cover all hydrocarbons found in the field. Earlier, the licence was restricted to one item only (e.g. oil) and separate licence was required if any other hydrocarbon, for example, gas was discovered and exploited.
The policy allows the successful bidder to sell at the prevailing market price of gas, rather than at administered price.
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When: 2 September 2015