Contracts signed under Open Acreage Licensing Policy Bid Round-I

The government of India signed the contracts of the blocks awarded under the Open Acreage Licensing Programme (OALP) Bid Round-Iwith the awardees at New Delhi. The event was presided by Shri Dharmendra Pradhan, Minister for Petroleum and Natural Gas & Skill Development and Entrepreneurship, along with Dr. M. M. Kutty, Secretary (P&NG), Dr. V. P. Joy, Director General- Directorate General of Hydrocarbons and other senior officials of the Ministry.

Initially, 110 e-bids were received for 55 blocks on offer with participation from 9 companies, singly or in the consortium. Finally, contracts have been signed for all 55 blocks with 6 companies. The details of the contract areas signed are placed at Annexure 1. This will add a huge accretion of 59,282 sq.km to the exploration area. This is about 65% of the area presently under exploration in the country. This will lead to a significant increase in E&P activities in India and in long run discoveries from these fields may significantly boost domestic production.

Significance:

Initially, 110 e-bids were received for 55 blocks on offer with participation from 9 companies, singly or in the consortium. Finally, contracts have been signed for all 55 blocks with 6 companies.

This will add a huge accretion of 59,282 sq.km to the exploration area. This is about 65% of the area presently under exploration in the country. This will lead to a significant increase in E&P activities in India and in long run discoveries from these fields may significantly boost domestic production.

The bid round-I of OALP was launched in January 2018 under the liberalized Hydrocarbon Exploration and Licensing Policy (HELP). It is for the first time that bidding in the E&P sector in India was for blocks that had been selected by bidders themselves with government playing a facilitator role.

Open Acreage Licensing Policy (OALP):

The OALP, a part of the government’s Hydrocarbon Exploration and Licensing Policy (HELP), gives exploration companies the option to select the exploration blocks on their own, without having to wait for the formal bid round from the Government. The company then submits an application to the government, which puts that block up for bid. The new policy will open up 2.8 million square kilometers of sedimentary basins for exploration and eventual production.

The Hydrocarbon Exploration & Licensing Policy (HELP) opens up India’ entire sedimentary basin for investment from domestic and foreign players under a simplified, transparent and investor-friendly fiscal and administrative regime.

The new policy aims to provide Investors a ready access to huge amount of seismic data available in National Data Repository (NDR), flexibility to carve out exploration acreages through an open acreage licensing process and increased operational autonomy through a new revenue-sharing model.

The National Data Repository (NDR) manifested through an open acreage licensing (OAL) process will be a key facilitator by providing seamless access to India’s entire E&P data process through a digital medium to all investors with the objective of harnessing the potential of India’s large basinal area.

Open Acreage Licensing Policy and the National Data Repository together are a significant and welcome step towards opening up the hydrocarbon exploration and production industry in India. By placing greater discretion in the hands of explorers and operators, the Licensing Policy attempts to address a major drawback in the New Exploration Licensing Policy, which forced energy explorers to bid for blocks chosen by the government. Such initiatives help India attract enough investment to meet the government’s objective of reducing oil imports by 10% by 2022.

There’s a compelling opportunity for gas, which India must seize to reduce import dependency and shift to a lower carbon trajectory. HELP is more about gas than oil. While the overall thrust is positive, concerns regarding the contractual regime and gas pricing formula remain, and will need to be addressed.

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