Govt to carve out hydrocarbon blocks for OALP-II

By: | Published: August 29, 2018 5:14 AM

In the first round of the OALP, a critical part of the Hydrocarbon Exploration Licensing Policy (HELP), launched in March 2016, explorers had shown interest in 55 blocks. However, according to sources, only 12 EoIs have been submitted for the second round, likely to be launched in September.

The government started bid rounds for hydrocarbon blocks last year after the last round of bidding under the National Exploration Licensing Policy in 2010.

Given the tepid response from explorers to auction of hydrocarbon blocks under the second round of the Open Acreage Licensing Policy (OALP), the Directorate General of Hydrocarbon (DGH) has decided to carve out four blocks on its own and put up for bidding.

In the first round of the OALP, a critical part of the Hydrocarbon Exploration Licensing Policy (HELP), launched in March 2016, explorers had shown interest in 55 blocks. However, according to sources, only 12 EoIs have been submitted for the second round, likely to be launched in September.

“These blocks (carved out by the government) have been selected on the basis of data that has come in through the National Seismic Programme, as this data is currently not accessible by all. The blocks that the government thinks has prospects as per this data will be added to the list of blocks to be put up for bidding,” said a source, adding that one such block is likely to be in Mahanadi basin off the coast of Odisha.

Under the OALP, once an explorer selects areas after evaluating the National Data Repository (NDR) and submits the EoI, it will be put up for competitive bidding and the entity offering the maximum share of oil and gas to the government will be awarded the block. The new system replaces the older system wherein the government itself used to carve out areas to be put out for bidding. The source said the additional five points given to bidders for identifying blocks during the evaluation process will not be available in case of bids submitted for blocks identified by the government.

According to another source, the government in the future may also carve out coal bed methane (CBM) blocks and put up for auction under the OALP. These will mostly be fields in which coal mining is complete. The Union Cabinet had in April 2018 relaxed the rule for Coal India and its subsidiaries from applying for grant of license for extraction of under their coal bearing areas.

The HELP provides uniform licences for exploration and pro- duction of all forms of hydrocarbons, enabling contractors to explore conventional as well as unconventional oil and gas resources. The fields are offered under a revenue-sharing model and throw up marketing and pricing freedom for crude oil and natural gas produced.

The NDR has been created to provide explorers data on the country’s repositories, allowing them to choose fields according to their capabilities. Data received through the National Seismic Programme, an in-depth study of the country’s 26 sedimentary basins, is continuously being added to the NDR. According to the first source quoted above, there are many explorers who are looking at data even now. The window for submitting EoIs for the second round of OALP closed on May 15, 2018.

According to the first source, the low participation in the second round is not unusual. “It is a continuous process and so it is unlikely that there will be massive participation in every round. It is a norm world over,” said the source, adding that earlier when the government decided rounds, the participation was high because of the one-off nature of the opportunity.

The government started bid rounds for hydrocarbon blocks last year after the last round of bidding under the National Exploration Licensing Policy in 2010. Apart from the OALP, the Centre is also offering relatively smaller fields relinquished by ONGC and Oil India under the Discovered Small Field policy.

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