Print Friendly, PDF & Email

Open Acreage Licensing Policy

Topics covered:

  1. Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
  2. Important aspects of governance, transparency and accountability.

 

Open Acreage Licensing Policy

 

What to study?

  • For Prelims: OALP, HELP.
  • For Mains: Need for HELP and its significance.

 

Context: The ministry of petroleum and natural gas has launched the third bidding round under the Open Acreage Licensing Policy (OALP), offering 23 hydrocarbon blocks covering over 31,000 sq km for exploration.

  • With the launch of the third bidding round, more than 1,20,000 sq km has now been made available for exploration in last one year under the OALP.
  • The 23 blocks offered now are spread across states of Rajasthan, Gujarat, Tamil Nadu, Andhra Pradesh, Odisha, Assam, West Bengal, Nagaland, Tripura, Maharashtra, Jharkhand and Madhya Pradesh. Some blocks are also in eastern and western offshore.

 

What is Open Acreage Licensing Policy (OALP)?

  1. The OALP, a critical part of the Hydrocarbon Exploration and Licensing Policy, provides uniform licences for exploration and production of all forms of hydrocarbons, enabling contractors to explore conventional as well as unconventional oil and gas resources.
  2. Fields are offered under a revenue-sharing model and throw up marketing and pricing freedom for crude oil and natural gas produced.
  3. Under the OALP, once an explorer selects areas after evaluating the National Data Repository (NDR) and submits the EoI, it is to be put up for competitive bidding and the entity offering the maximum share of oil and gas to the government is awarded the block.
  4. NDR has been created to provide explorers’ data on the country’s repositories, allowing them to choose fields according to their capabilities. Data received through the National Seismic Programme, an in-depth study of 26 sedimentary basins, are continuously being added to the NDR.

 

Background:

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 Programme (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.

The main features of HELP are Revenue Sharing Contract, single Licence for exploration and production of conventional as well as unconventional Hydrocarbon resources, marketing & pricing freedom, etc.

 

What was the need for the new Hydrocarbon Exploration and Licensing Policy (HELP)?

India is the 3rd largest consumer of crude oil and petroleum products with oil and gas contributing 34.4% to primary energy consumption. In 2015-2016, India’s crude oil import dependence rose to 81% from 78.5%. In last five years, India has seen overall decline in exploration and production of conventional resources.

New Exploration Licensing Policy (NELP) created in 1997 ended the state dominance and created a competitive environment leading to liberalization of oil and gas exploration and production industry. However, it failed to keep the momentum of production growth and attracting the foreign investment.

Bureaucratic hurdles like multiple approvals and sanctions, cost overruns, and disputes led to some oil majors leaving their awarded blocks and exit from the space.

 

Sources: the hindu.

Mains Question: The Hydrocarbon Exploration Licensing Policy, or HELP, is said to signal one of the most important market-oriented sectoral reforms of the past two decades. Examine why.