Government announces new licensing policy to boost oil output

The Union Ministry of Petroleum & Natural Gas has announced new Open Acreage Licensing Policy (OALP) for oil and gas exploration.
The new policy will allow bidders to carve out areas where they want to drill. It will help energy hungry India and world’s third-largest oil consumer to attract greater foreign investment to boost output.

Key Facts

• The objective of OLAP is to increase India’s indigenous oil and gas production by maximising the potential of already discovered hydrocarbon resources in the country.
• OALP offers single license to explore conventional and unconventional oil and gas resources to propel investment in and provide operational flexibility to the investors.
• It provides operational flexibility to the investors. It is departure from the current licensing policy of government identifying the oil and gas blocks and then putting them on auction.
• Under it, Government will conduct auction of oil and gas blocks twice a year, with the first round being held in July 2017.
• The selection of oil blocks will be based on seismic and well data provided by Directorate-General of Hydrocarbons in National Data Repository which offers total of 160TB data of India’s 26 sedimentary basins
• The OALP auction will be held under the overhauled exploration licensing policy, allowing pricing and marketing freedom to operators and shifts to a revenue sharing model.

Comment

OALP is part of the strategy to make India a business and investor friendly destination and cut import dependence by 10% and achieve the plan to double  existing oil production from current 80 million metric tons to about 150-155 million metric tons by 2022. In this new model, government will not micromanage, micro monitor with producers rather only share revenue. Thus, it gives an option to a company looking for exploring hydrocarbons to select the exploration areas on its own. The July 2017 auction under this new policy will be India’s first major exploration licensing round since 2010.

Month: Current Affairs - March, 2017