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Govt announces open acreage licensing policy to boost oil output

08 Mar 2017 Evaluate

In order to boost the country’s output of oil and gas through greater foreign investment, the government has announced an open acreage licensing policy (OALP), which will allow the bidders to select areas where they want to drill. The policy will also give the operators the much needed freedom in pricing and marketing for oil and gas.

The government has planned to conduct auction of oil and gas blocks under the OALP, twice in a year. The first round of the auction is going to be held in July this year which will be India's first major exploration licensing round since 2010. OALP auction will be held under the overhauled exploration licensing policy which allows pricing and marketing freedom to operators and shifts to a revenue sharing model.

The new policy which is part of the strategy to make India a business and investor friendly destination and cut import dependence will be a departure from the current licensing policy of government identifying the oil and gas blocks and then putting them on auction. In this new policy, the government will not micromanage, micro monitor with producers. It will only share revenue which will be an open and regular affair, instead will give an option to a company looking for exploring hydrocarbons to select the exploration areas on its own. This selection can be done based on the seismic and well data that the Directorate-General of Hydrocarbons has put in a National Data Repository.

At present, India is the third-largest oil consumer behind the U.S. and China whose domestic crude oil production of 36.95 million tons in 2015-16 barely met 20 per cent of its oil needs and natural gas output at 32.249 billion cubic metres, meets less than half of its needs.

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