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India receives 51 bids for oil & gas exploration under OAL Policy

24 Oct 2017 Evaluate

Upstream petroleum regulator Directorate General of Hydrocarbons (DGH) has said that as many as 51 proposals seeking about 60,000 square kilometre of area for oil & gas exploration have been bid for in India's first auction under a new bidding mechanism - Open Acreage Licensing (OAL) policy. To raise domestic production and cut excessive dependence on imports, the country opened 2.8 million square km of sedimentary basins for oil and gas exploration in July.

DGH has stated that the OAL policy, which allows an explorer to study the data available and bid for blocks of their choice, is witnessing an encouraging response from the industry. OAL replaces the old system of government carving out areas and bidding them out. OAL allows investors to carve out their own areas and put in an expression of interest (EoI). Once an EoI is received for an area, it is put on competitive bidding and any company offering the government maximum share of oil and gas is awarded the block.

Under OAL, companies can carve out any area that is currently not under any licensee, and evince interest for doing exploration and production. Once an area is selected, the government will put it up for bidding and any firm offering the maximum share of oil or gas produced from the area would be awarded the block. Till now, the government has been selecting and demarcating areas it feels can be offered for bidding in an exploration licensing round. So far, 256 blocks had been offered for exploration and production since 2000. The last bid round happened in 2010. Of these, 254 blocks were awarded, but as many as 156 have already been relinquished due to poor prospectivity.

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