Govt offers 21 oil/gas blocks in OALP-6 auctions

By: |
August 07, 2021 2:00 AM

This will be the third round of OALP auctions after the Cabinet, in February 2019, amended the revenue-sharing model for hydrocarbon exploration and capped the government’s revenue share at 50%. The deadline for bid submission is October 6.

By the closing of the Indian bond market, Brent crude oil prices were trading at $67.27 a barrel, which was up $2.09 or 3.21%, for the contract maturing in October.By the closing of the Indian bond market, Brent crude oil prices were trading at $67.27 a barrel, which was up $2.09 or 3.21%, for the contract maturing in October.

The Union government on Friday launched the sixth round of hydrocarbon blocks auction under the Open Acreage Licensing Programme (OALP), offering 21 blocks spread across approximately 35,346 square kilometres. Investments of around $300-400 million are expected from the round in these oil/gas blocks.

This will be the third round of OALP auctions after the Cabinet, in February 2019, amended the revenue-sharing model for hydrocarbon exploration and capped the government’s revenue share at 50%. The deadline for bid submission is October 6.

In the fifth round of OALP auctions where 11 oilfields were offered, only one private firm and two state-owned companies had participated. State-run Oil and Natural Gas Corporation (ONGC) was the only bidder for eight blocks while Oil India was the sole bidder for two blocks. For the smallest oil field offered in OALP-5, the director general of hydrocarbons (DGH) received bids from Invenire Petrodyne and ONGC. No private player had participated in the fourth OALP round where all the seven blocks offered were awarded to ONGC.

In the first three rounds Vedanta was awarded 51 blocks and one blocks went to the joint venture between BP Exploration and Reliance Industries. A total of 105 exploration blocks measuring an area of 1,56,580 square kilometers have been awarded in the first five OALP bid rounds, of which exploration activities are being actively carried out in 89 blocks. Commercial production of crude oil has not commenced from OALP blocks so far.

The 2019 Cabinet decisions also stated that contractors bidding for blocks in category 2 and 3 basins — which are unexplored and without much geo-scientific data — will only pay royalty and statutory levies and do not have to share any revenue unless windfall gains are made. To attract more players, the government had also decided to provide concession in royalty if production commences within specific timelines. Indigenous crude oil production caters to about only 15% of the country’s requirements and the 30.5 million tonnes of crude oil produced in the country in FY21 was 5.6% lower than the production from a year-ago period.

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