In a bid to revive interest in oil and gas exploration by simplifying rules, the petroleum ministry's has floated a consultation paper titled “New Fiscal and Contractual Regime for Award of Hydrocarbon Acreages”, to invite comments from stakeholders. The government has proposed to introduce a revenue-sharing model with operators for exploration and development of oil and gas blocks, replacing the current profit-sharing mechanism.
The Oil Ministry said that in the recently announced marginal field policy, the government has provided pricing and marketing freedom for the natural gas. On similar lines, it is proposed to provide pricing and marketing freedom for the natural gas to be produced from the areas to be awarded under the new contractual and fiscal regime, in order to incentivise production from these areas. It also proposed Open Acreage Licensing Policy (OALP) allowing companies to choose the area for exploration rather than government identifying blocks and offering them in bid rounds.
The ministry has also proposed a uniform licensing policy that will allow operators to explore all forms of oil and gas resources, including coal-bed methane, shale gas and oil, tight gas and gas hydrates and suggested an open acreage licensing that will allow companies to bid for exploration blocks of their choice. Under open acreage licensing, which will replace the existing New Exploration Licensing Policy, the upstream regulator will apply its own geological data to authenticate the expressions of interest submitted by companies for an area and carve out blocks. This will be followed by invitation of bids from all interested parties.
At present, conventional oil and gas exploration is covered by the New Exploration Licensing Policy (NELP) while CBM exploration and production is governed by a separate regime. There is no licensing regime for shale oil and gas. The Comptroller and Auditor General (CAG) had questioned this regime and argued that it “does not provide adequate incentives to private contractors to reduce capital expenditure”.
