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Open Acreage Licensing Policy (OALP)

Kishlaya Misra

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Pre Independence Era (1886-1946)Nomination Era(1947-1990)Pre-Nelp Era(1990-1996)Nelp Era(1997 – till date)OALP (future)

Policy Developments in E&P Sector

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NELP Bidding Outcomes

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Upstream Fiscal Attractiveness Maximum Government Take Fiscal Flexibility State Participation Domestic Market Obligation

Oil and gas sector performance Exploration Activity Crude Production Reserves Consumption

Exploration Investment Attractiveness

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Economic Performance GDP Growth FDI Confidence Trade Index

Socio-Political DemocracyGovernance

India ranks 17th in exploration investment attractiveness

US,Canada,Russia,UK,France are top five investment attractive nations.

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Nelp-VIII, had announced 70 blocks and got 76 bids for 36 of the 70 blocks on offer.

Nelp IX infintely delayed by government

In terms of fiscal regime, potential bidders were put off by the government’s this decision last year to offer a tax incentive only for the production of oil and not for natural gas

Non participation of Global Players

Current Policy Issues

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Oil and gas exploration and production policy which will replace current New Exploration Licensing Policy (NELP)

Unlike NELP, OALP would enable bidders to bid for blocks on offer at any time of the year

A prerequisite for the transition to OALP is a national data repository.

Data for prospective blocks would be made available to the bidders through National Data Repository (NDR)

The NDR aims at gathering all the available geo-scientific data available in India under one roof so that it is available to all the agencies that require it.

What is OALP

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Any explorer can bid for any unallocated area at any time

Any operator can scrutinize the data pool to chalk out its own block outline

The regulator will assess the bid made by this operator, call in any competing bids and, finally, decide whether to grant it or not

OALP permits every company to study and specialize in certain geographies if they so wish, making the entire country open for E&P. Right now, companies are limited to what the DGH puts out

Companies can extend their block boundaries if they find that the hydrocarbon channels in their designated blocks are extending to nearby underground rock layers, and the adjoining areas are open

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There can be two types of bidding in OALP1. For Reconnaissance 2. For Exploration  There shall be a provision to exit after

reconnaissance phase without any penalty or reward, as long as work program is  completed. The other options shall be to continue reconnaissance phase (say for R&D blocks) or enter exploration.

Subsequent program at the end of reconnaissance phase (Further survey or exploration) shall require a separate bid. To encourage proper bids, it shall be possible for a new party to emerge winner and acquire and operate block.

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First reconnaissance bidder who does not wish to exit but looses bid and consequently right to continue (further survey or   explore), he shall have a prior right to participate in further program. This is his upside. In this case he does not get any other reimbursement.

If the reconnaissance bidder wishes to continue (further survey or explore) but looses the bid, he shall also have the alternate    option to partially recover the cost of data from the winner. This shall be on a predetermined formula. This amount shall be  permitted to be cost recoverable for the new winner.

Penalties for non completion of work program shall be similar to the prevalent NELP regime

Force Majeure conditions need to be revised, as the current terms are seen to be too heavily weighed in favor of Government.

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If the Reconnaissance Company “R” looses the Exploration bid, it has the option of exercising either of following options as a prior right1. Reimbursement of Standard Cost of Work done2. Participate in the block as a non-operator

At least 4 weeks before the end of contract period, the operator shall submit to DGH the data

Bid Evaluation Criterion for Exploration Bids shall be same as for NELP

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The bid shall be for contiguous area only, and shall be built up on multiples of grid specified by DGH.

Recommended grid size is 2’x2’

Area Bid

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Bid evaluation criteria(BEC) will be:-

Technical capability of the proposed Operator(TC) Financial capability of the bidding

company/consortium(FS) Fiscal Package(FP) Work Programme(WP)

For Shallow offshore and Onland areas: TC 6%,FS 4%,WP 60%,FP 30%

For Deepwater: TC 9%,FS 6%,WP 55%,FP 30%

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Thank you