Govt launches Round-III of oil exploration bids under OALP; expects Rs45,000-cr from Round-II

Union minister of petroleum and natural gas & skill development and entrepreneurship Dharmendra Pradhan launched the notice inviting offer (NIO) and MRSC for OALP Bid Round-II, which offers 14 exploration and prospecting (E&P) blocks, with an area of approximately 30,000 sq km.

Of these, 10 blocks are based on expressions of interest submitted by the bidders, and 4 blocks have been carved out by the government based on data received through the National Seismic Programme and the Resource Reassessment Study carried out by the government.

With the launch of NIO, bidders can study the data available in National Data Repository (NDR) and select blocks for the bidding. The bidders would be able to submit their bids through an online e-bidding portal starting 8 January 2019 and the bidding round would continue till12 March 2019.

The blocks are spread across 7 sedimentary basins, 14 blocks are on offer under OALP-II which includes 8 blocks (onland), 5 blocks (shallow water) and1 block (ultra-deep water). It is expected that OALP Round II would generate immediate exploration work commitment of around $500-600 million (around Rs3,500 crore) .

The government expects gross estimated revenue of Rs45,000 crore from discovered small field bid round-II on 25 contract areas and Rs9,000 crore under discovered small field bid round-I from 30 contract areas.

The gross estimated revenue is based on estimates of oil and gas hydrocarbon in place reserves, assumption in terms of hydrocarbon recovery factor, hydrocarbon sale price, etc, from 25 contract areas considering project life of 15 years. However, actual revenue realisation from these fields may vary based on actual award of contract areas, development strategy adopted by the contractor, actual production realised and techno-economics of the individual field.

The last date of bid submission under Discovered Small Field Round-II has been extended by one month, ie, till 18 January 2019, on account of requests received by the prospective bidders.

Under the DSF Policy, only those hydrocarbon discoveries of national oil companies which could not be monetised for a long period of time are offered for bidding, although ONGC is continuing to make endeavours to optimise production from its operational fields.

The total gas accretion of ultimate reserves in financial year 2017-18 is 83.74 billion cubic meter (BCM) and the total gas ultimate reserves established by the public/private sector oil companies in the country as on 1 April 2018 is 2,313 BCM.

Commercial production from most of the newly identified reserves is yet to commence as the time required for development of hydrocarbon discoveries varies from 3 to 8 years depending upon various factors such as location/size of discovery, availability of infrastructure facility besides other oil fields services.

Government has taken steps for development of gas based economy in the country which include plan for expansion in natural gas supply with the help of additional domestic gas production, expansion of re-gasified liquefied natural gas (RLNG) terminals in the east and west coasts of the country, nationwide gas grid, including North Eastern states and policy initiatives for the promotion of use of natural gas, ie, clean fuel by all sectors of the economy. For all exploration activities in the onland blocks, the respective state government grants petroleum exploration licence (PEL).

With this 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 increased to 150,000 sq. km. after OALP I and would touch 2,10,000 sq km after OALP Round II and III bidding exercises by May 2019 and is expected to touch 300,000 sq km by the end of the year 2019, with another two rounds of bidding expected to be finalized (IV and V) in 2019.

The licensing programme under HELP which adopts the Revenue Sharing Model is a step towards improving the ‘Ease of Doing Business’ in the Indian Exploration and Production (E&P) sector. It comes with attractive fiscal terms like reduced royalty rates and no oil cess, marketing and pricing freedom, submission of Expression of Interests (EoIs) round the year, bid rounds commencing every six months and a single licence to cover conventional and unconventional hydrocarbon resources.