Second round of OALP auctions to start in May

The second round of auctions under the Open Acreage Licensing policy (OALP) for allotting hydrocarbon assets will start by May. The bidding stage of the first round of auctions is set to start next week.

“Our plan is to kick off the next round by May. This will be immediately after the conclusion of the first round of auctions,” said a source close to the development. 

The new rounds are based on the Hydrocarbon Exploration Licensing Policy (HELP), the new contractual and fiscal model for award of hydrocarbon acreages, adopted by the government in March 2016. According to sources, the idea of having back-to-back bidding rounds is part of the road map set by Prime Minister Narendra Modi for a 10 per cent cut in imports by 2022. 

“Apart from this, to increase production from existing blocks, the government is coming up with a policy on improved oil recovery (IOR) and will approach the Cabinet by February. This will give additional incentives to producers working on difficult fields,” he added. 

In FY17, the government had conducted bidding for the discovered small fields (DSF). Around 31 contract areas were awarded to 22 companies, of which 15 were new entrants. On the other hand, the ongoing first round of OAL is set for the second stage of financial bidding next week. 

Of the 311 exploration blocks awarded so far under the Pre-National Exploration Licensing Policy (NELP) and NELP rounds, only 178 blocks are operational now. According to petroleum ministry, after the ninth round of NELP in 2010, 117 companies are operating in India, of which 48 are foreign companies. 

“Under the new regime, the government will not micromanage the daily affairs and it will be a revenue sharing model, also giving pricing and marketing freedom to operators. Moreover, waiver on cess, customs duty exemption, etc, are also on offer,” he added.

During the first stage of bidding, companies submit expression of interest for the areas they prefer to cover. Operators will have the flexibility to choose Petroleum Operations Contract (POC) or Reconnaissance Contract (RC). While RC will have contract period of three years, those under POC will get eight years for exploration and 20 years for development and production. 

There will also be an option to migrate from RC to POC after three years. Of the total sedimentary area of 3.14 million sq km that India has, 2.7 million sq km was on offer under OAL — 1.5 million sq km onshore and 1.2 million sq km offshore.