Centre clears auction of 69 Oil India, ONGC fields

"These discoveries 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," read a government statement.

Under the new policy, 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.

Under this policy, exploration companies will be able to submit bids for exploiting these oil fields.

These oil fields have not been developed earlier as they were considered as marginal fields, and hence were of lower priority.

"With appropriate changes in policy, it is expected that these fields can be brought into production. In keeping with the principle of `Minimum Government Maximum Governance’, significant changes have been made in the design of the proposed contracts," read the statement.

"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," read the statement.

"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," it said.

The second change is that 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 new policy for these marginal fields also allows the successful bidder to sell at the prevailing market price of gas, rather than at administered price," read the statement.

This decision is expected to stimulate investment as well as higher domestic oil and gas production, said the official statement.