Govt offers 8 blocks for production of hydrocarbons under OLAP bid

Source: The post is based on the article “Govt offers 8 blocks for production of hydrocarbons under OLAP bid” published in “Hindu Businessline” on 18th October 2023

What is the News?

The Ministry of Petroleum & Natural Gas (MoPNG) has offered 8 blocks for exploration and production (E&P) of hydrocarbons under the Open Acreage Licensing Policy (OALP).

What is Open Acreage Licensing Policy(OALP)?

Open Acreage Licensing Policy(OALP) is a part of the Hydrocarbon Exploration and Licensing Policy(HELP).

It was introduced by the government in 2016 and became operational from 2017.

OALP gives an option to a company to select the exploration blocks on its own without waiting for the formal bid round from the Government.

Under OALP, a bidder intending to explore hydrocarbons may apply to the Government seeking exploration of any new block which was not already covered by exploration.

The Government will examine the interest and if it is suitable for award, then the govt will call for competitive bids after obtaining necessary environmental and other clearances.

What is Hydrocarbon Exploration and Licensing Policy(HELP)?

Hydrocarbon Exploration and Licensing Policy(HELP) was adopted in 2016.

It replaced the New Exploration Licensing Policy (NELP). 

The objective of the policy is to enhance domestic oil and gas production by intensifying exploration activity and investment.

Components of the policy:

– Uniform license for exploration and production of all forms of hydrocarbon

– Open acreage policy

– Revenue sharing model: This encourages cost efficiency in mining operations by replacing the profit-sharing contract established by NELP.The contractor pays the government a share of its revenue (net of royalty) as per the contract.

– Marketing and pricing freedom: The contractor is free to sell crude oil in the domestic market through a transparent bidding process.