Open acreage replaces NELP as new policy regime in oil licensing
The government announced replacement of the New Exploration and Licensing Policy (NELP) in the petroleum sector with Open Acreage Licensing (OAL), under the framework of a Hydrocarbon Exploration and Licensing Policy (HELP).
This replaces the controversial ‘profit petroleum’ concept with a revenue share model.
OAL will allow investors looking at exploring of hydrocarbons to select blocks after studying the data available through the National Data Repository (NDR), without waiting for a formal bid round from the government.
Investors will have the option to carve out an area of their choice and send an expression of interest (EoI) for reconnaissance or a petroleum operations contract. The Directorate General of Hydrocarbons will finalise the block and invite bidding bi-annually. Other companies can send online or physical bids, followed by evaluation and award of final contract. The contracts would MODEL REVENUE SHARING CONTRACT Unified licence for all types of hydrocarbons Revenue sharing fiscal regime Graded royalty rates Marketing and pricing freedom
For areas with moderate and sparse data Contract period two years, extendable by a year Contractor can licence data for 12 years
be awarded in January and July every year though the EoI can be given perpetually.
Union Petroleum Minister Dharmendra Pradhan said, “We expect OAL to accelerate exploration activity.” The minister said the government was committed to liberalise the sector by simplifying processes, increasing market access and bringing developments in the technology domain.
The reconnaissance contract will be for two years, extendable by a year. The petroleum operations contract will have an exploration period of eight to 10 years, and a contract period of 20 years. For a given area, the EoI for a petroleum operations contract would be preferred over a reconnaissance contract.
The NDR was unveiled on Wednesday and firms may identify stretches through it. In the current round, 2.7 million sq. km constituting the entire unexplored area is being offered. An area of 10 minute x 10 minute (approx. 330 sq. km) has been classified as sector for all types of hydrocarbons. One or more than one contiguous sector can be combined to form a block for giving EoI. The NDR has gridded the Indian sedimentary basins into sectors and divided into zones with corresponding data. Nine rounds of NELP had attracted $40 billion (~2.6 lakh crore) in investment so far. Pradhan, however, said the total oil and gas production from NELP is equivalent to only three days of oil consumption. The last NELP round was in 2010, after which OAL is the biggest offering for exploration.