New single-licence regime for all forms of hydrocarbons and revenue-sharing critical to raising India’s oil output
Vedanta Cairn, operator of the prolific Barmer field in Rajasthan, is set to bag an impressive 41 out of the 55 hydrocarbon blocks offered under the Open Acreage Licensing Policy (OALP), a critical part of the March 2016-launched Hydrocarbon Exploration Licensing Policy (HELP). An empowered committee of secretaries (ECS) is learnt to have recommended the award of these blocks to the Anil Agarwal-led firm, nine to public-sector Oil India and just two to ONGC.
While the first OALP round did not see any foreign oil giant bidding — domestic major Reliance Industries also opted out — the bullish approach by Vedanta Cairn could potentially make the new policy reasonably successful and provide at least incremental pace to India’s stagnant hydrocarbon output growth.
Prime Minister Narendra Modi has set a target to cut the country’s import dependence for oil from around 80% now to 67% by 2022 and 50% by 2030. HELP’s hallmarks are single licence for exploration of all forms of hydrocarbons (including shale gas and coal bed methane), a simple revenue-sharing model and marketing and pricing freedom for the developers.
ONGC had bid for 37 blocks under OALP-1 and OIL for 22 (both either individually or through a consortium) while Vedanta Cairn had put in bids for all the 55 areas that were on offer. As many as 110 bids were received in total — 92 bids were received for 46 on-land blocks, 18 bids came in for nine offshore blocks. Apart from the firms mentioned above, the other bidders for the first round of OALP either individually or through a consortium include Bharat Petro Resources, Selan Exploration Technology, Hindustan Oil Exploration Company and Sun Petro.
The ECS recommendations will now have to be cleared by the petroleum minister and the finance minister. In April, 2018, the Cabinet Committee on Economic Affairs (CCEA) had given them the power to award oil and gas exploration blocks to successful bidders under HELP after getting recommendations from the ECS, a move to fast-track the process. Earlier, awarding of blocks required the CCEA’s approval. ECS comprises secretaries of economic affairs, revenue, expenditure, law and petroleum. The ministers are most likely to ratify the recommendations made by the ECS.
The 55 blocks have a total area of 59,282 sq km compared with 102,000 sq km under exploration in the country at present. These blocks are spread across the country’s sedimentary basins Assam-Arakan, Mumbai Offshore, Cambay, Rajasthan, Krishna-Godavari Basin, Cauvery, Kutch, Saurashtra, Himalayan foreland and Ganga basins.
Under HELP, blocks will be awarded to those companies that offer the highest share of revenue to the government. The government recently cleared a policy which will allow mining of such unconventional hydrocarbons from the fields already awarded or nominated in regimes prior to HELP.