Petroleum, finance ministers get right to award auctioned oil blocks

In a bid to quicken award of licences, the Cabinet on Wednesday allowed ministers of finance and petroleum to award oil and gas blocks to their winners in the ongoing auction, bids for which are due on May 2.

Till now, only the Cabinet headed by Prime Minister had the powers to approve award of a block or area for exploration and production of oil and gas. "In line with the government initiative of ease of doing business, the Union Cabinet chaired by Prime Minister Narendra Modi has given its approval for delegating the powers to minister of petroleum and natural gas and finance minister to award the blocks/contract areas to successful bidders," an official statement said.

The two ministers will approve the award based on the recommendations of a panel of secretaries, called the Empowered Committee of Secretaries (ECS). The delegation of power is for Open Acreage Licensing Policy (OALP) bid rounds under the Hydrocarbon Exploration and Licensing Policy (HELP). At present, the first round of OALP is underway, with bids for 55 exploration blocks on offer for prospecting of oil and gas due on May 2. These blocks are to be awarded by July. "Under HELP, blocks are to be awarded twice in a year. Therefore, this delegation of powers will expedite the decision making process on awarding blocks and give a boost to the initiative of ease of doing business," the statement said.

India had, in July last year, allowed companies to carve out blocks of their choice with a view to bringing about 2.8 million sq km of unexplored area in the country under exploration. Under this policy, called HELP, 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 licence.

The EoIs can be put in at anytime of the year but they are accumulated twice annually. 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. HELP replaced the New Exploration Licensing Policy (NELP) where government carved out areas and bid them out. Under the NELP policy, ECS make recommendations to Cabinet Committee on Economic Affairs (CCEA) for award of blocks after considering the bid evaluation criteria (BEC) and conducting negotiations with the bidders wherever necessary.