Petroleum Minister Dharmendra Pradhan on Tuesday put state-owned ONGC and OIL on notice saying oil and gas reserves they hold need to be monetised through joint ventures with domain experts or the government will take them away and auction them.
Speaking at BNEF Summit, he said state-owned firms cannot indefinitely sit on resources when the nation is a net importer of oil and gas.
Despite India bidding out acreages to private and other companies since the 1990s, Oil and Natural Gas Corporation (ONGC) and Oil India Ltd (OIL) hold a "sizeable number of acreage for years," he said.
"We have asked them to do two things - do it yourself, (produce oil and gas) through some joint venture (with domain experts and foreign companies) (and) through a new business model. But the government cannot permit you to hold resources for an indefinite time," he said.
ONGC and OIL, which discovered and brought to production all of India's eight sedimentary basins, produce about three-fourths of the nation's oil and gas. The two, especially ONGC, have faced criticism ranging from not being able to quickly bring discoveries to production to lower recovery.
Pradhan said India needs energy for its ambitious economic growth agenda. "We want to reduce import dependency. We want to monetise our own resources."
"So we have given policy guidance to our state-owned oil companies - either you do on your own through new partners and new economic model, (else) the government will after a particular period intervene and use its authority to bid out the resources," he said.
The government has already taken away dozens of small and marginal discoveries from the two firms and auctioned them in what is known as Discovered Small Field (DSF) rounds. DSF offers pricing and marketing freedom to operators, something which ONGC and OIL do not have currently, constraining their efforts to monetise smaller discoveries.
But now Pradhan has indicated the government would not hesitate to take away larger idle discoveries and auction them to private and foreign players.
Earlier this month, the minister had stated that the Directorate General of Hydrocarbons (DGH), the oil ministry's technical arm, had the "full mandate" to identify unmonetised major fields that could be offered for bidding.
"Resources don't belong to a company. They belong to the nation and the government. They cannot lie with a company indefinitely. If somebody cannot monetise them, we will have to bring a new regime," he had said on June 10.
The statement comes weeks after his ministry told ONGC to sell a stake in producing oil fields such as Ratna R-Series in western offshore to private firms and get foreign partners in KG basin gas fields.