India kicks off bidding for 55 oil and gas exploration blocks

India on Thursday kicked off the bidding for the first round of Open Acreage Licensing programme (OAL), in which 55 blocks will be up for grabs. 

This is the first major bidding round in India after the National Exploration Licensing Policy (NELP) round in 2010.

The bids will be closed on April 3, while blocks will be finally awarded by May. Releasing the notice inviting offers (NIO) for the blocks, covering an approximate area of 59,282 square kilometer, petroleum minister Dharmendra Pradhan said, "This bidding has seen many firsts, which included the fact that bidders carved out the area. Bidders have shown interest for the substantive area of 60,000 square kilometers, while in earlier times it used to be 25,000 sq km. The process will continue until April 3."

The highlights of the round include a single licence for all forms of hydrocarbons and simplified revenue sharing model with marketing and pricing freedom. Pradhan added that at a time when the environment is investor friendly, the aim of the government is to bring maximum revenue to the exchequer. 

"Now, bidding will be there twice in a year. The first time, activities have increased in Kutch offshore. It is a sign of collective effort. investors have shown keenness in Himalaya, Himachal Pradesh, and Uttar Pradesh too," he said. 

Out of the total 311 exploration blocks awarded so far under-discovered field, Pre-NELP and National exploration licensing policy (NELP) rounds, only 178 blocks are operational now. According to petroleum ministry, after the ninth round of NELP in 2010, a total of 117 companies are operating in India, of which 48 are foreign companies.

Under the new regime, during the first stage of bidding, companies submitted an expression of interest for the areas they prefer covering all the sedimentary basins in the country. Moreover, operators will have the flexibility to choose Petroleum Operations Contract (POC) or Reconnaissance Contract (RC). While RC will have a 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 reconnaissance contract to petroleum operations contract after three years.

Of the total sedimentary area of 3.14 million square kilometre that India has, 2.7 million sq km was on offer under OAL during the initial stage — including 1.5 million sq km onshore and 1.2 million sq km offshore. India is likely to witness a fresh round of Open Acreage Licensing (OAL II) for allotting hydrocarbon assets in the country by the month of May 2018.

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


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