India to shift to OALP system for auctioning oilfields

India will switch to a round-the- year system of accepting bids for oil and gas exploration blocks that bidders themselves have carved out, as it looks to raise domestic production and cut import dependence.
The Open Acreage Licensing Policy (OALP), which will be launched in next few months, will be departure from current licensing policy of government identifying the areas and then putting them on auction, official sources said.
OALP gives an option to a company looking for exploring hydrocarbons to select the exploration blocks on its own, without waiting for the formal bid round from the government.
Once a company demarcates the area by identifying the size and boundaries, the government will put it up for bidding and award it to the firm that offers the maximum.

Bidders will be offered the choice of either a six year Petroleum Operations Contract for exploration, development and production or a two-year Reconnaissance Contract for probing for oil and gas, according to the draft OALP policy brought out by the Directorate General of Hydrocarbons (DGH).
Pre-qualification criteria for bidding would be one year experience in oil and gas exploration and production (E&P).

"In the Open Acreage Licensing route, the freedom of identification of block and seeking to have them offered for contract will be with the investors. The block identified ought to fall within the sedimentary basins of India" and should not be part of any license with any of the companies currently, it said.

Once an application is made for an exploration license, DGH will within 15 day publish the expression of interest (EoI). Bids will be invited within two months thereafter and evaluated in a similar duration, the draft OALP policy said.
According to the timelines, contracts are to be signed within six months of initiation of the process.
OALP follows an overhaul of exploration licensing policy last year with a shift to a revenue sharing model and allowing pricing and marketing freedom to the operators.
Auction under OALP will be the first major exploration licensing round since 2010 when the 10th licensing round ended. Last year, 31 small discovered fields were auctioned.

In the ten New Exploration Licensing Policy (NELP) rounds, 254 blocks were awarded. Of these 170 have been relinquished while the remaining 84 are under operation.