Open Acreage Licensing Policy

• 18 Nov 2020

Why in News

Recently, contracts for 11 oil and gas blocks offered under the Open Acreage Licensing Policy (OALP) Bid Round-V were signed.

Key Points

• OALP:
  
  • The Hydrocarbon Exploration and Licensing Policy (HELP) replacing the erstwhile New Exploration Licensing Policy (NELP) was approved in March 2016 and the Open Acreage Licensing Policy (OALP) along with the National Data Repository (NDR) were launched in June 2017 as the key drivers to accelerate the Exploration and Production (E&P) activities in India.
  • Under OALP, companies are allowed to carve out areas they want to explore oil and gas in. Companies can put in an expression of interest for any area throughout the year but such interests are accumulated thrice in a year. The areas sought are then put on auction.
  • The successful roll-out of the HELP regime, followed by OALP Bid Rounds, has led to an increase in exploration acreages in India.
    
    • The exploration acreage which stood at about 80,000 sq. km. from earlier regimes now stands at approx. 2,37,000 sq. km., post the award of blocks under OALP Round-V.
  • The OALP has helped in removing red-tapism and brought in a quantum jump in the Exploration & Production sector.
• Concerns:
  
  • Inadequate Role of Private Players: State-owned Oil and Natural Gas Corp (ONGC) and Oil India (OIL) have won all the 11 blocks offered in the latest bidding round for oil and gas exploration blocks.
    
    • The lack of interest from private players in recent rounds of OALP bidding has been a result of a lack of policy clarity from the government and unsuitable taxation and regulatory conditions.
    • A proposal by the Petroleum Ministry to reduce the oil cess charge on domestic production of crude has been rejected by the Finance Ministry.
  • Limited Participation of Foreign Companies: India’s efforts to attract foreign energy giants into hydrocarbon exploration and production haven’t been quite fruitful.

Hydrocarbon Exploration and Licensing Policy

• Under this Policy, exploration blocks shall be awarded on a continuous basis through e-bidding in a transparent manner.
• Features:
  
  • Revenue sharing model instead of Profit sharing for hydrocarbon exploration.
    
    • Under revenue sharing model, the government share accrues immediately on production, unlike in cost-recovery where the contractors first claimed its costs before splitting leftover profits, if any.
  • Unified license for all types of hydrocarbons.
  • Freedom to carve out acreages of choice under OALP bid rounds.
  • Full marketing and pricing freedom of gas.

National Data Repository

• NDR is a government-sponsored E&P data bank with state-of-the-art facilities and infrastructure for preservation, upkeep and dissemination of data to enable its systematic use for future exploration and development.
• Following are the data that is being stored in NDR: Seismic Data, Well & Log Data, Spatial Data, other data like Drilling, Reservoir, Production, Geological, Gravity & Magnetic etc.
• Having an NDR for India has helped in enhancing prospects of petroleum exploration and facilitating the Bidding Rounds by improving the availability of quality data.

Source: PIB