State-owned explorer ONGC plans to outsource the production of oil and gas in about 60 of the discovered small and marginal fields to private firms to enhance output.

Industry sources said the explorer plans to engage consultants to call bids for these blocks and outsource the production activity, while retaining ownership over the blocks.

They said the consultants would identify the blocks which would be placed under hammer in the first phase. The production in the field would be outsourced to bidders who offer the highest revenue, or production share, over and above a baseline production.

Sources said the move was similar to what global energy firms follow to enhance production from mature oilfields. The fields will be auctioned under production enhancement contracts (PEC). Under PEC, the private company invests and introduces comprehensive technologies to improve production.

Analysts said it was a win-win situation for both the players as the output from these fields were too low for players such as ONGC to invest. However, for small players, with little overhead cost, it would be an economically viable operation. They can also bring in new technology to raise output.

The small and marginal fields are said to contribute only 5 per cent to ONGC’s total production, while 95 per cent of its production come from 60 large fields.

During the March quarter, ONGC’s net profit fell the most in 13 quarters because of lower crude oil prices and higher costs. Net profit slumped 51 per cent sequentially to Rs 4,045 crore in the January-March period. Crude oil and condensate production in April 2019 was lower by 6.9 per cent.