Govt to launch DSF round 3 for discovered oil & gas fields on May 18

• The Notice Inviting Offer (NIO) along with Model Contract will be released through an online event on 18th May, 2021, said the DGH

• The event will be presided over by Minister for Petroleum and Natural Gas Dharmendra Pradhan

New Delhi: After a lag of over two years, the government is now set to launch the third bidding round for Discovered Small Fields (DSF) on May 18, according to the Directorate General of Hydrocarbons (DGH). "Government of India is going to launch Discovered Small Field (DSF) Bid Round-III under the Discovered Small Field Policy. The Notice Inviting Offer (NIO) along with Model Contract will be released through an online event on 18th May, 2021," said the DGH on its website. The DSF auction process is an international competitive bidding round of acreage award.

The event will be presided over by Minister for Petroleum and Natural Gas Dharmendra Pradhan. The news comes a month after Petroleum Joint Secretary (Exploration) Amar Nath said at a virtual event CERAWeek by HIS Markit that the government is planning to launch DSF round 3 within two-three months.

Discovered Small Fields (DSF) 

In 2016, the government brought in a new DSF policy wherein 'idle' small discovered fields of state-owned Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) were auctioned to on liberalised terms, including marketing and pricing freedom and lower taxes. The policy brought in important changes like replacing the existing cost-recovery based production sharing model with revenue sharing. It allowed freedom of marketing and pricing for both oil as well as gas, exploration of all kinds of hydrocarbons and no restrictions on exploration activities during the contract period. 

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The Ministry of Petroleum and Natural Gas launched DSF Round-1 in May 2016 under which 46 contract areas consisting of 67 fields spread across nine sedimentary basins were auctioned. The process had witnessed 134 e-bids for 34 contact areas of the 46 offered. Later, the second round was launched in August 2018, under which 25 contract Areas were offered for international competitive bidding. It received 145 bids for 24 areas out of 25.

The backdrop

The third round of DSF auctions will be launched in the backdrop of an increased emphasis placed by the government on Atmanirbhar Bharat (self-reliant India). India's crude oil production, which is majorly controlled by public sector companies, has been on a steady downward trajectory for over a decade now, increasing India's dependence on crude oil imports. The vagaries of the international crude oil market has pushed India to work towards self-reliance in ensuring its energy security. In order to increase India's domestic crude oil production, the government has shown increased interest in opening the sector further to private players and has launched policies like Open Acreage Licensing Policy (OALP) and DSF to on liberalised terms. The government is also keen on increasing the share of natural gas in India's energy mix as part of its strategy to decarbonise the energy consumption and reduce its dependence on crude oil imports. India currently imports over 80 percent of its crude oil requirement and around 50 percent of its liquefied natural gas (LNG) requirement.

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