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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: Ministry of Petroleum and Natural Gas signs contracts for 32 blocks awarded under Open Acreage Licensing Programme (OALP) Bid Rounds – II & III.

 

What is Open Acreage Licensing Policy (OALP)?

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.

Fields are offered under a revenue-sharing model and throw up marketing and pricing freedom for crude oil and natural gas produced.

  • 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.
  • 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)?

  • 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.