Open Acreage License Policy (OALP)

The Open Acreage Licensing Policy (OALP) is a key reform initiative introduced by the Government of India in 2017 to boost domestic exploration and production (E&P) of oil and natural gas. It allows companies to choose exploration blocks of their interest from available data at any time of the year, without waiting for formal bidding rounds. The policy marks a major shift from the earlier system of government-nominated exploration blocks under the New Exploration Licensing Policy (NELP), making the exploration regime more investor-friendly, flexible, and transparent.
Implemented under the broader framework of the Hydrocarbon Exploration and Licensing Policy (HELP), OALP is aimed at accelerating exploration activity, reducing import dependency, and increasing domestic energy security.

Background and Context

Before OALP, India followed the New Exploration Licensing Policy (NELP), launched in 1997–98. Under NELP:

• The government periodically offered selected blocks for competitive bidding.
• Companies could not propose their own exploration areas.
• The system involved multiple clearances and long approval timelines, which often discouraged private investment.

By the mid-2010s, India’s oil import dependence had crossed 80%, while exploration activities lagged behind expectations. To revitalise the sector and attract investment, the government introduced the Hydrocarbon Exploration and Licensing Policy (HELP) in March 2016, replacing NELP.
A key feature of HELP was the Open Acreage Licensing Policy (OALP), officially implemented in July 2017, allowing investors to bid for exploration areas based on real-time geoscientific data available in the National Data Repository (NDR).

Objectives of the OALP

The primary objectives of the Open Acreage Licensing Policy are to:

• Encourage continuous and investor-driven exploration of hydrocarbons.
• Provide flexibility for companies to select blocks of their choice instead of waiting for government announcements.
• Reduce import dependency by enhancing domestic oil and gas production.
• Promote ease of doing business through simplified procedures and transparent approvals.
• Improve utilisation of India’s vast sedimentary basin area for exploration.
• Attract both domestic and foreign investment in upstream hydrocarbon activities.

Key Features of OALP

The OALP introduced several innovative features that modernised India’s exploration framework:

1. Open Acreage System

• Companies can select any block within India’s sedimentary basins that is not already under exploration or production.
• The proposal can be submitted to the Directorate General of Hydrocarbons (DGH) at any time during the year.
• Bidding rounds are conducted based on the areas identified by interested parties.

2. National Data Repository (NDR)

• A comprehensive digital database of India’s geological and geophysical information, maintained by the DGH.
• Enables investors to access seismic, well, and other geoscientific data before selecting exploration areas.
• Ensures transparency and informed decision-making.

3. Single License for All Hydrocarbons

• A single license covers exploration and production of all hydrocarbon types — conventional oil and gas, shale gas, coal-bed methane, gas hydrates, etc.
• Simplifies operations and allows optimal resource utilisation.

4. Revenue-Sharing Model

• Replaces the earlier profit-sharing mechanism under NELP with a simple revenue-sharing contract between the government and the contractor.
• The government’s revenue is linked to production and price, not to costs incurred, reducing disputes and administrative burden.

5. Marketing and Pricing Freedom

• Operators have freedom to market crude oil and natural gas produced under OALP at arms-length market-determined prices.
• Encourages efficiency and competitiveness.

6. Simplified Approval Process

• Bidding and approvals are handled through digital platforms for faster decision-making.
• The system provides clear timelines and reduces bureaucratic delays.

7. Exploration Incentives

• Extended exploration period of 6 years (onshore) and 8 years (offshore).
• Fiscal incentives for exploration in frontier, deep-water, and ultra-deep-water regions.
• Reduced royalty rates for difficult terrains to attract higher investment.

Implementation Process

The OALP framework operates through the following stages:

1. Data Access and Area SelectionCompanies access the National Data Repository (NDR) to study basin information and identify potential areas for exploration.
2. Expression of Interest (EoI)Investors submit an Expression of Interest (EoI) for specific blocks to the DGH.
3. Bidding RoundThe DGH periodically collates received EoIs and announces formal bidding rounds. Competing firms can then bid for the identified blocks.
4. Evaluation and AwardBids are evaluated based on work programme commitment, revenue share offered, and technical capability.The selected bidder signs a Model Revenue Sharing Contract (MRSC) with the Government of India.
5. Exploration and Production (E&P)Successful bidders commence exploration, followed by development and production activities as per the approved plan.

OALP Bid Rounds

Since its launch, several OALP bidding rounds have been conducted:

In total, by 2023, around 125 exploration blocks covering more than 2,00,000 sq. km had been awarded through OALP, spanning 20 sedimentary basins.

Advantages of OALP

1. Investor Flexibility:Companies can propose exploration areas based on data-driven analysis instead of waiting for periodic government offerings.
2. Transparency and Efficiency:The use of the National Data Repository ensures data transparency and informed investment decisions.
3. Reduced Bureaucracy:Simplified procedures and online processes lower administrative hurdles.
4. Increased Exploration Activity:Continuous bidding encourages year-round participation and competition.
5. Economic Benefits:Enhances domestic hydrocarbon production, reducing import bills and strengthening energy security.
6. Technological Advancement:Encourages adoption of advanced exploration technologies and global best practices.

Challenges and Limitations

Despite its progressive design, OALP faces certain challenges:

• Limited Private Sector Participation: Public sector companies like ONGC and Oil India dominate bidding, while global oil majors have shown limited interest.
• Data Gaps: Certain basins still lack high-quality seismic and geological data.
• Operational Delays: Environmental and land acquisition clearances continue to cause time overruns.
• Low Hydrocarbon Yields: Some awarded blocks have yielded limited discoveries so far, reducing investor enthusiasm.
• Global Energy Transition: The shift toward renewable energy and carbon neutrality has reduced appetite for long-term oil and gas investments.

Reforms and Recent Developments

To further improve OALP’s attractiveness, the government has introduced several reforms:

• Relaxed fiscal terms for exploration in frontier and deep-water areas.
• Extended exploration period from 4 to 6 years for onshore and from 6 to 8 years for offshore blocks.
• Reduced royalty rates for difficult terrains to incentivise exploration.
• Integration with the National Seismic Programme (NSP) for better data coverage.
• Online monitoring through the National Exploration and Licensing Administration (NELAnet) portal.

The OALP continues to evolve in alignment with the government’s target of achieving energy independence by 2047 and reducing hydrocarbon import dependence by 10%.

Significance

The Open Acreage Licensing Policy (OALP) represents a fundamental shift in India’s hydrocarbon exploration framework. Its significance lies in:

• Empowering investors through autonomy and data access.
• Encouraging competition and innovation in exploration.
• Contributing to national energy security and reducing reliance on imports.
• Aligning India’s upstream sector with global best practices in transparency and efficiency.