Govt signs contracts for 32 oil and gas blocks awarded under OALP

The government launched OALP Bid Rounds-II and III on 7 January 2019 and 10 February 2019, respectively. While Bid Round–II offered 14 blocks (covering total area of approx. 30,000 sq km), Bid Round-III offered 23 blocks, including 5 CBM blocks (covering total area of approx 32,000 sp.km.) under International Competitive Bidding (ICB) process. 

Bidding for both the rounds closed on 15 May 2019. Subsequent to evaluation, a total of 32 blocks were approved for award to six companies, for which the Revenue Sharing Contracts have been signed on Tuesday.

The total area awarded under the two rounds for the 32 blocks is 58,998 sq.km, including 31,551 sq km of land blocks and 27,447 sq km of offshore blocks.

Speaking on the occasion, petroleum minister Dharmendra Pradhan said increasing production of crude oil and gas is the priority of the government. He said the country already has a network of refineries and a robust marketing setup, and E&P sector is expected to come up in a big way. 

“Today’s award of OALP contracts is a step in this direction”, Pradhan said, adding that for a country aiming to become a $5 trillion economy, energy security, availability and accessibility are essential. India, he said, is expected to surpass China in energy consumption in a few years. 

He assured the successful bidders of OALP rounds that all issues can be solved through discussions and consultations, and they need not delay the projects on that score.

The first OALP bid round launched in January 2018, was an overwhelming success with 110 bids received for 55 blocks covering 59,282 sq km area. All the 55 blocks were awarded in October 2018 and the operators of these blocks have since initiated petroleum exploration activities, or are in final stages of obtaining Petroleum Exploration Licenses (PELs). The first oil/gas from these blocks is expected before year 2023. 

The revenue sharing contract model under the Hydrocarbon Exploration & Licensing Policy (HELP is a giant step towards improving the ‘Ease of Doing Business’ in the oil exploration and production (E&P) sector. It comes with attractive and liberal terms like reduced royalty rates, no oil cess, marketing and pricing freedom, round the year bidding, freedom for investors for carve out blocks of their interest, a single license to cover both conventional and unconventional hydrocarbon resources, exploration permission during the entire contract period, and an easy, transparent and swift bidding and awarding process.

With the latest award of exploration licences, the acreage which stood at approximately 90,000 sq km in 2017 has now been enhanced to 2,10,000 sq km. The country’s exploration acreage is expected to reach 300,000 sq km by the end of the year 2019 with further two rounds of bidding. The fourth cycle of submitting Expressions of Interest (EoIs) closed on 15 May 2019 and the fifth cycle of EoI is open till 15 November 2019.