Discuss the key features of the New Exploration Licensing Policy (NELP) throwing light on its role in oil industry.

Published: February 6, 2016

National Exploration License Policy 1997 was a result of dismantling of the administrative price mechanism. Under the policy licenses for exploration are being awarded only through a competitive bidding system and National Oil Companies (NOCs) are required to compete on an equal footing with Indian and foreign companies to secure Petroleum Exploration Licenses (PELs).
The main features of NELP are:

  • Private participation for Intensive exploration of Indian basins
  • To bring-in new & state of art technology in exploration & exploitation
  • Transparent Bid Evaluation system

The present model for NELP is production sharing contract (PSC) model, where the contractors are allowed to recover the entire cost of exploration and production before sharing the profit with the government. This will be replaced by revenue-sharing model, where the bidder has to quote the amount of oil or gas output it is willing to offer to the government from the first day of production.

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