Open Acreage Licensing Policy

In News

• Recently, the Oil Ministry launched the sixth bid round of the Open Acreage Licensing Programme.

About

• Under this, 21 blocks, with an area of approximately 35,346 sq km are on offer to investors.
• These 21 blocks are spread across 11 Sedimentary Basins and include 15 Onland blocks, 4 Shallow Water blocks and 2 Ultra Deep Water blocks. 
• Category wise, there are 12 blocks in Category-I basins, 4 in Category II basins and 5 in category-III basins.

Open Acreage Licensing Policy (OALP)

• It is the most crucial part of the Hydrocarbon Exploration and Licensing Policy (HELP).
• It provides a single, uniform Licence for exploration and production of conventional as well as unconventional hydrocarbon resources.
• The Freedom to carve out acreages of choice under OALP bid rounds has been given to contractors.
• The revenue-sharing model is used for offering fields.
• Producers have complete marketing and pricing freedom for crude oil and natural gas produced.
• Procedure for allotment under OALP:

• Under the OALP, first, an explorer selects areas after evaluating the National Data Repository (NDR) 
• He then submits an Expression of Interest (EOI). 
  • Such EOI can be submitted thrice a year
• This field is put up for competitive bidding and the entity offering the maximum share of oil and gas to the government is awarded the block.

Benefits of OALP

• Removing red-tapism: 
  • It has reduced multiple licences and procedures for extracting different hydrocarbons even from the same well.
• Brought in a quantum jump in the Exploration & Production sector:
  • The successful roll-out of the HELP regime, followed by OALP Bid Rounds, has led to an increase in exploration acreages in India.
  • The exploration acreage stood at about 80,000 sq. km. the HELP regime.
    • Now, it has increased to approx. 2,37,000 sq. km., post the award of blocks under OALP Round-V in 2021.

Concerns Related to OALP

• Lesser involvement of Private Players:
  • Public Sector Companies like Oil and Natural Gas Corp (ONGC) and Oil India (OIL) are the major winners of the bidding rounds.
• Lack of clarity in Government Policy and Regulations 
• Higher Tax and Cess:
  • Proposal by the Petroleum Ministry to reduce the oil cess charge on domestic production of crude has been rejected by the Finance Ministry.
• Less Participation of Foreign Companies:
  • Indian attempts to attract Foreign Energy Giants are not yielding expected results.

Way Ahead

• Rationalise Taxation and Cess.
• Consult different stakeholders for their concerns.
• Timely and detailed guidelines.
• Incentivise the Private and Foreign Players to bring in better technology.

Source: Business Standard