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Government to Open Bid for Oil/Gas Licensing

  • 07 Jan 2019
  • 6 min read

The Centre has launched a new round of the auction for the 14 blocks for prospecting of oil and gas.

  • The auction will be done under the Open Acreage Licensing Programme (OALP) under the liberalized Hydrocarbon Exploration and Licensing Policy (HELP).
  • The blocks on offer in OALP-II include one in deep waters of Krishna Godavari basin and five shallow water blocks — two each in Andaman and Kutch basin and one in Mahanadi basin. Eight on land blocks - four in Mahanadi basin, two in Cambay and one each in Rajasthan and Cauvery are on offer.
  • The 14 blocks on offer measure around 29,000 square kilometers in area and are estimated to hold an in-place resource of 12,609 million tonnes of oil and oil equivalent gas.

Procedure of Auction

  • Under the Open Acreage Licensing Programme or OALP, companies are allowed to put in an expression of interest (EoI) for prospecting of oil and gas in any area that is presently not under any production or exploration license.
  • The blocks or areas that receive EoIs at the end of a cycle are put up for auction with the originator or the firm that originally selected the area getting a 5-mark advantage.
  • Blocks are awarded to the company which offers the highest share of oil and gas to the government as well as commits to doing maximum exploration work by seismic survey and drilling exploration wells.

Significance of Auction

  • Increased exploration will lead to more domestic oil and gas production, helping India, which is the world’s third largest oil importer, cutting import dependence.
  • New blocks will bring substantial investment in the sector and will help in generating employment.
  • It will also help in achieving the government target of cutting oil import bill by 10% to 67% by 2022 and to half by 2030.

Hydrocarbon Exploration Licensing Policy (HELP)

  • The government has launched the Hydrocarbon Exploration Licensing Policy (HELP) replacing the old policy of National Exploration and Licensing Policy (NELP).
  • Four main facets of HELP are:
    • uniform license for exploration and production of all forms of hydrocarbon,
    • an open acreage policy,
    • easy to administer the revenue sharing model and
    • marketing and pricing freedom for the crude oil and natural gas produced.
  • The uniform license will enable the contractor to explore conventional as well as unconventional oil and gas resources including coal bed methane, shale gas/oil, tight gas, and gas hydrates.
  • The concept of Open Acreage Policy enables Exploration and Production (E&P) companies to choose the blocks from the designated area.
  • The new policy has replaced the old system of government carving out areas and bidding them out.
  • It guarantees marketing and pricing freedom and moves away from production sharing model of previous policy to a revenue-sharing model, where companies offering the maximum share of oil and gas to the government are awarded the block.
  • Under the new regime, the Government will not be concerned with the cost incurred and will receive a share of the gross revenue from the sale of oil, gas etc. This is in line with Government’s policy of “Ease of Doing Business”.
  • HELP also provides for marketing freedom for crude oil and natural gas produced from these blocks. This is in tune with Government’s policy of “Minimum Government –Maximum Governance”.

National Data Repository

  • National Data Repository (NDR) is an integrated data repository of Exploration and Production (E&P) data of Indian sedimentary basins.
  • NDR is a fully Government of India owned E&P data repository.
  • NDR is hosted at Directorate General of Hydrocarbons (DGH). DGH is a technical arm of the Ministry of Petroleum and Natural Gas (MoPNG).
  • NDR offers an unique platform to all E&P Operators, E&P Service Companies, E&P Investors, Academia to delve inside diverse E&P datasets of Indian sedimentary basins.

Seismic Surveys

  • Reflection seismology (or seismic reflection) is a method of exploration geophysics that uses the principles of seismology to estimate the properties of the earth's subsurface from reflected seismic waves.
  • The method requires a controlled seismic source of energy, such as dynamite or a specialized air gun.
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