India’s top explorer Oil and Natural Gas Corporation is offering a stake to global oil companies to help develop challenging fields on the country’s east coast, according to a tender document.
The company did not say how big a stake it was offering to a potential partner.
India, the world’s third-biggest oil importer and consumer, imports over 80% of its oil needs. The country is keen to monetize its oil and gas resources to cut its import bill.
ONGC is hoping to lure interest from global companies with the “requisite technical expertise and financial strength” to support it in developing its Deen Dayal West field in the Bay of Bengal and ultra-deep discoveries in Krishna Godavari Basin.
“The EU is essentially an exercise for identifying companies having technical expertise and experience for the subject requirements,” the company said in the tender document.
“Interested companies will be allowed to participate in the subsequent bidding process initiated as per the response to this EoI subject to qualifying the bid evaluation criteria.”
The deadline for submitting expressions of interest is June 16, ONGC said in a tender document on its website.
ONGC acquired 80% participating interest in the DDW field in 2017 from Gujarat State Petroleum Corporation (GSPC). “ONGC intends to revise field development plan after firming up the good engineering and completion strategy for implementation in new wells”.
The company said. “Considering the inherent knowledge, cost, and tech challenges associated with the field, ONGC would like to seek technical expertise to firm up a way forward for future development.”
Oil company stocks were trading deep in the red at noon on May 27, with ONGC down 9 percent and BPCL 5 percent after reports claimed that the government was considering a windfall tax on state-owned and private oil and gas (O&G) giants.
The government was looking to offset the inflation impact and increased public expenditure on fertilizer, fuel, and food subsidies, sources told Hindustan Times. They added that the tax could be one way to manage finances.
The windfall tax would likely be applied when oil prices cross a certain level. It is usually imposed on companies whose financials receive unexpected “lucky” boosts due to uncontrolled factors.
Windfall tax is, simply, a tax levied on companies whose financials have been boosted purely by luck, or events for which they are not responsible. For instance, energy companies have benefitted from the global spike in energy prices on account of Russia’s invasion of Ukraine.
Besides the UK, Italy, Hungary, and Spain have also moved to impose some kind of windfall tax on companies. Hungary said it would tax windfall on additional profits earned by various sectors, including oil and gas companies for two years, to fund subsidies.
While Italy announced a one-time 25 percent levy on energy companies to subsidize energy costs for consumers and businesses.
Furthermore, these reports seem to have spooked investors and it’s being reflected in the stock movement of all the oil and gas majors like ONGC, BPCL, Oil India, Reliance, and Vedanta.
Shares of Oil and Natural Gas Corporation (ONGC) hit a four-month low of Rs 142.35, down 6 percent on the BSE in Friday’s trade after the company said it will invest Rs 31,000 crore over the next three years in exploring the Indian sedimentary basin for fuel reserves and on reports of a windfall tax to be put in place by the government.