As part of India’s energy security strategy to enhance domestic hydrocarbon production, the petroleum and natural gas ministry has launched the seventh bid round under the liberal open acreage licensing programme (OALP). Under the latest round, around 15,766 sq km has been provided to investors.
A total of eight blocks spread over six sedimentary basins are being offered and consists of five onland blocks, two shallow water blocks and one ultra-deepwater block. Some of the terms of these bid rounds consist of reduced royalty rates, no oil cess, marketing and pricing freedom, round the year bidding, a single license to cover both conventional and unconventional hydrocarbon resources and exploration permission during the entire contract period.
“It is expected that OALP Round VII would generate immediate exploration work commitment of around USD 300-400 million," Ministry of Petroleum and Natural Gas said in a statement.
With India’s domestic energy production being low, energy security is an vital focus area for the National Democratic Alliance (NDA) government as was articulated by Prime Minister Narendra Modi in his Independence Day speech on 15 August.
“In continuation of its aggressive programme for exploration and adhering to the prescribed timelines, the Government has launched the Open Acreage Licensing Programme(OALP) Bid Round-VII for International Competitive Bidding. The bids can be submitted through a dedicated online
e-bidding portal till 1200 hrs. onFebruary 15, 2022," the statement said.
“Award of these blocks is likely to be completed by the end of March 2022. Successful award of Round-VII Blocks would add further 15,766 sq. km of exploration acreage and cumulative acreage under OALP will be increased to 207,692 sq. km," the statement added.
India’s domestic energy production has been low. In what doesn’t bode well for the country’s energy security, India’s crude and oil and gas production fell by 5.22% and 8.06% respectively in the last financial year.
“The Hydrocarbon Exploration and Licensing Policy (HELP) was approved in March 2016. In continuation to its determination for reduction in import dependency of oil and gas and accelerating E&P activities, the Government notified the further policy reforms in Exploration and Licensing Policy in February, 2019. The focus was shifted from 'revenue' to 'production' maximization’," the statement added.
“Since the launch of HELP on 30 March 2016, five rounds of OALP have been concluded for 105 E&P blocks; award of 21 blocks under sixth round of OALP is under progress. These 126 blocks comprise about 191,926 sq.km. of area spread across 18 sedimentary basins," the statement stated.
The government has opened up markets to the private segment for retail outlets, implemented the discovered small fields policy, the Hydrocarbon Exploration Licensing Policy (HELP) and the Open Acreage Licensing Policy and allowed marketing and pricing freedom for gas produced from deep and ultra-deep water areas and coal-bed methane fields.
“In a significant step towards boosting India’s domestic oil & gas production, the biggest oil & gas tender in the history of the industry launched for 75 oil & gas blocks launched by @DghIndia Covers DSFs, across 32 contract areas both onshore & offshore," union petroleum and natural gas minister Hardeep Singh Puri said in a tweet.
With domestic production incapable to cater to the ever-increasing demand, India will depend on imports in the foreseeable future. India is particularly vulnerable as any boost in global prices can affect its import bill, stoke inflation and widen trade deficit.
State run Indian oil companies have also began importing crude oil from USA, Russia, Canada, Australia, Brazil, Guyana, Norway, Egypt, Gabon, Ghana, Congo, Equatorial Guinea, Libya and Nigeria. This comes in the backdrop of the Indian government working on diversifying the country’s energy basket with crude oil supplies from non-Opec sources.
