Open Acreage Licensing Policy (OALP) | UPSC CURRENT AFFAIRS |
Open Acreage Licensing Policy (OALP): Current Affairs
Open Acreage Licensing Policy (OALP)
Context: Minister of Petroleum and Natural Gas & Steel gave a brief about Open Acreage Licensing Policy (OALP).
About Open Acreage Licensing Policy (OALP)
- The OALP is a critical part of the Hydrocarbon Exploration and Licensing Policy (HELP). Under the OALP, once an explorer selects areas after evaluating the National Data Repository (NDR) and submits the Expression of Interest, it is to be put up for competitive bidding and the entity offering the maximum share of oil and gas to the government is awarded the block.
- Fields are offered under a revenue-sharing model and throw up marketing and pricing freedom for crude oil and natural gas produced.
- An NDR has been created to provide explorers’ data on the country’s repositories, allowing them to choose fields according to their capabilities. Data received through the National Seismic Programme, an in-depth study of 26 sedimentary basins, are continuously being added to the NDR.
- The HELP replacing the erstwhile New Exploration Licensing Policy (NELP) was approved in March 2016 and the OALP along with the National Data Repository (NDR) were launched in June 2017 as the key drivers to accelerate the Exploration and Production activities in India.
Need for the new Hydrocarbon Exploration and Licensing Policy (HELP)?
- India is the 3rd largest consumer of crude oil and petroleum products with oil and gas contributing 34.4% to primary energy consumption. In 2015-2016, India’s crude oil import dependence rose to 81% from 78.5%.
- In the last five years, India has seen a decline in the exploration and production of conventional resources.
- NELP created in 1997 ended the state dominance and created a competitive environment leading to liberalization of the oil and gas exploration and production industry. However, it failed to keep the momentum of production growth and attract foreign investment.
- HELP comes as a reform measure by the Government of India. HELP provides a uniform licensing system to cover all hydrocarbons such as oil, gas, coal bed methane, shell oil and gas etc. under a single licensing framework coupled with open acreage policy.
- Now, it will be possible to explore the overlapping resources in a block without any concerns related to the contractual obligations. Open acreage will give companies the flexibility to identify the areas of interest throughout the year.
- A contractual agreement under HELP will be based on revenue sharing unlike profit-sharing PSCs (Production Sharing Contracts) under NELP. In PSCs, companies first recover their capital and operating expenditure before sharing the profits with the government.
- RSCs (Revenue Sharing Contracts) will give the flexibility to the companies to manage operations without any such scrutiny of the government auditor. In RSCs, revenue will be shared between the government and the producer right from the first batch of production of oil and gas.
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