The Government of India has recently initiated the bidding procedure for 11 oil and gas blocks under the Open Acreage Licensing Policy Round-V (OALP-V). Promising to stimulate business opportunities, these 11 blocks spanning 8 sedimentary basins comprise eight on-land blocks, two shallow water blocks and one ultra-deep water block. The initiative emerges as a significant measure in enhancing the ‘Ease of Doing Business’ in the Indian Exploration and Production (E&P) sector.
Government’s Hydrocarbon Exploration & Licensing Policy (HELP)
Since its inception, the government has granted 94 blocks under the auspices of the Hydrocarbon Exploration & Licensing Policy (HELP) scheme. Designed with the revenue-sharing contract model in mind, HELP facilitates an organized and incentive-laced environment for the exploration and production of hydrocarbons. The introduction of the fifth round of the Open Acreage Licensing Policy (OALP-V) is projected to generate an immediate exploration work commitment estimated at around USD 400-450 million.
About Open Acreage Licensing Policy (OALP)
Declared by the Union Government in June 2017, the Open Acreage Licensing Policy (OALP) provides investors the luxury to choose their areas of interest. It allows companies to pick their exploration blocks, after which they propose an expression of interest. As per the policy, these blocks are then auctioned by the government.
Attractive Features of OALP
OALP is structured with liberal and gratifying terms such as lessened royalty rates and freedom from oil cess. Moreover, it offers marketing and pricing autonomy, freedom to investors to carve out their blocks of interest, a single licence covering both conventional and unconventional hydrocarbon resources, and permission for exploration during the entire contract period. The policy also boasts a year-round bidding process and a transparent, swift procedure for awarding contracts.
Quick Facts
| Fact | Details |
|---|---|
| Blocks Offered under OALP-V | 11 (8 on-land, 2 shallow water, 1 ultra deep water) |
| Sedimentary Basins Covered | 8 |
| Expected Exploration Work Commitment | USD 400-450 million |
| Promising Features of OALP | Reduced royalty rates, no oil cess, marketing and pricing freedom, single licence for conventional and unconventional resources. |
OALP and Ease of Doing Business
The Open Acreage Licensing Policy promises to be a vital step towards improving the ‘Ease of Doing Business’ within India’s E&P sector. With its investor-geared benefits and streamlined contract awarding process, OALP is expected to stimulate business opportunities, further bolstering the country’s E&P capabilities. This strategic move by the government is anticipated to not only intensify India’s hydrocarbon production but also attract substantial foreign investment.