India may offer up to 60 pc stakes in producing fields to private cos

New Delhi/Mumbai: India plans to offer stakes of up to 60 percent in oil and gas fields owned by state energy companies that are already under production to private firms, said five government and company sources with knowledge of the matter.

The government is making the decision after failing to draw investment from global oil majors in new fields. The plan would boost India’s domestic oil and gas output and would meet Prime Minister Narendra Modi’s target to reduce oil imports by 10 percent by 2022. However, the plan could reduce profits of state-owned companies.

India is the world’s third-largest crude importer, buying 80 percent of its supplies from overseas.

The sales plan would affect so-called “nomination blocks” or fields handed to state-owned Oil and Natural Gas Corp and Oil India Ltd. The fields are located both onshore and offshore, according to the sources.

The Directorate General of Hydrocarbon (DGH), a unit of the oil ministry, has suggested these state companies form joint ventures with private firms including foreign majors that have long eyed these fields, the sources said.

India’s cabinet could accept the new policy by December, said one of the sources, a government official.

The DGH has also proposed the state-owned companies enact technical tie-ups with private firms, offering to give them an assured rate of return if the output increases beyond a certain level, the five sources said.