3rd round of oil, gas auction under OALP launched; 23 blocks up for bidding

It is expected that OALP round-III would generate immediate exploration work commitment of around $600-700 mn

India on Sunday launched its third round of petroleum and natural gas auctions under the open acreage licencing policy (OALP) in which a total of 23 blocks are up for bidding by global oil and gas majors. Interestingly, this comes at a time when production from OALP-1 is expected to start only in 2025.   

This will cover an area of approximately 32,000 square kilometres. Out of the total blocks on offer, 18 were carved out of expressions of interest submitted by various companies. The government has carved out an additional five blocks to augment coal bed methane (CBM) production in the country. The bid round has opened with the launch of the notice inviting offer (NIO) and model revenue sharing contract (MRSC) for OALP bid round-III. 

It is expected that OALP round-III would generate immediate exploration work commitment of around $600-700 million. 

The fourth cycle of submitting expressions of interest (EoIs) is currently going on till May 15, 2019, and would be followed by the fifth cycle till November 15, 2019. 

This comes after the completion of OALP-1, which was launched in January 2018, in nine months time. Around 110 bids were received for 55 blocks covering 59,282 sq km area on offer. The blocks of that round were awarded to winning bidders in October 2018. 

Out of the 55 blocks that were on offer during the first round, Anil Agarwal-led Vedanta got 41 -- while the remaining were shared between Oil India, GAIL (India), Hindustan Oil Exploration Company (HOEC) and Bharat PetroResources. "Operators of these blocks have either initiated exploration activities or are in the process of obtaining Petroleum Exploration Licenses (PELs) to initiate exploration activities. First oil/gas is expected before 2025," a government statement said.  

Addressing the Petrotech 2019 event, in which OALP-III was launched, Petroleum Minister Dharmendra Pradhan said, "Our government is focussed on complete energy access to Indians. When we started, around 130 million households were connected to clean cooking fuel. Today, our LPG penetration has increased from 55 per cent to 90 per cent. India will soon be connecting all houses with clean cooking fuel." 

The government had recently launched bid round-II on January 7, 2019, wherein 14 blocks, with an area of approximately 30,000 sq km, were offered for bidding. The bidding under OALP round-II would continue till March 12 and the award of these blocks to winning bidders is expected by the end of May 2019.

With the successful roll-out of the HELP/OALP regimes, together with the National Data Repository (NDR), the government has achieved a massive addition to the exploration acreage of India. The acreage, which stood at approximately 90,000 sq km in 2017, was enhanced to 150,000 sq km after OALP I and would touch 210,000 sq km after OALP round-II and round-III bidding exercises by May 2019. It is expected to touch 300,000 sq km by the end of the year 2019, with another two rounds of bidding expected to be finalised (rounds IV and V) in 2019.