Govt to kick off new energy exploration round on July 1

The government will on July 1 commence the first bidding round for oil and gas through an open acreage licensing policy (OALP), allowing bidders to select where they want to drill.

“The process will be kicked off from July 1, when interested parties can start submitting their expressions of interest (EoIs) for a particular area. That window will be open for three to four months till November. Then we will evaluate the EoIs and will invite bids. By the end of January, we are planning to award the blocks,” said an official close to the development.  

Finance Minister Arun Jaitley and Petroleum Minister Dharmendra Pradhan will launch the National Data Repository (NDR) and OALP on June 28.

India has 26 sedimentary basins over 3.14 million sq. km, and crude oil and natural gas are being produced in seven basins. In the new rounds, 2.7 million sq. km will be on offer, comprising 1.5 million sq. km of onshore and 1.2 million sq. km of offshore areas. 

According to the new Hydrocarbon Exploration Licensing Policy (HELP), the government will not micromanage the daily affairs of operators. This will be a revenue-sharing model, providing pricing and marketing freedom to operators. The recently concluded first round of auctions for discovered small fields was conducted under the HELP.

“In the NDR, sedimentary basins gridded into sectors and divided into zones with corresponding data are made available. The NDR is based on seismic and well data, and investors can identify areas with potential through this,” the official added. 

The NDR will offer 160 terabytes of data on India’s 26 sedimentary basins.

“We are looking forward to participate in this round. It is advantageous that the investor will have a choice of area and the revenue sharing model will also attract investors,” said D K Sarraf, chairman and managing director of Oil and Natural Gas Corporation.  

The incentives for operators will include waiver of oil cess on crude oil production from the blocks and customs duty exemption on goods and services imported for petroleum operations.

Of the 311 exploration blocks awarded under the National Exploration Licensing Policy (NELP), pre-NELP and the discovered field rounds, 178 blocks are operational. According to the petroleum ministry, after the ninth round of the NELP in 2010, 117 companies operating in India, of which 48 are foreign companies.

Under OALP, operators will have the flexibility to choose between a petroleum operations contract and reconnaissance contract. The reconnaissance contract will be valid for three years and the petroleum operations contract will allow eight years for exploration and 20 years for development and production.  There will also be an option to migrate from a reconnaissance contract to a petroleum operations contract after three years.

To attract investors, the government has kept royalty rates for deepwater and ultra-deepwater blocks at zero for the first seven years and five per cent and two per cent, respectively, after seven years. For shallow water blocks, the royalty rate is 7.5 per cent, while the rate for oil from on-land blocks is 12.5 per cent and gas 10 per cent.