Open Acreage Licensing Policy (OALP)

Kishlaya Misra
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Policy Developments in E&P Sector

Pre Independence Era (1886-1946)

Nomination Era(1947-1990)
Pre-Nelp Era(1990-1996)
Nelp Era(1997 – till date)
OALP (future)

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NELP Bidding Outcomes

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Exploration Investment Attractiveness
 Upstream Fiscal Attractiveness
 Maximum Government Take
 Fiscal Flexibility
 State Participation
 Domestic Market Obligation

 Oil and gas sector performance

 Exploration Activity
 Crude Production
 Reserves
 Consumption

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Economic Performance
 GDP Growth
 FDI Confidence
 Trade Index

Socio-Political
Democracy
Governance

 India ranks 17th in exploration investment attractiveness

 US,Canada,Russia,UK,France are top five investment

attractive nations.
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Current Policy Issues
 Nelp-VIII, had announced 70 blocks and got 76 bids for 36
of the 70 blocks on offer.

 Nelp IX infintely delayed by government

 In terms of fiscal regime, potential bidders were put off by

the government’s this decision last year to offer a tax
incentive only for the production of oil and not for natural
gas

 Non participation of Global Players

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What is OALP
Oil and gas exploration and production policy which will
replace current New Exploration Licensing Policy (NELP)
Unlike NELP, OALP would enable bidders to bid for
blocks on offer at any time of the year
A prerequisite for the transition to OALP is a national
data repository.
Data for prospective blocks would be made available to
the bidders through National Data Repository (NDR)
The NDR aims at gathering all the available geo-scientific
data available in India under one roof so that it is
available to all the agencies that require it.

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 Any explorer can bid for any unallocated area at any time
 Any operator can scrutinize the data pool to chalk out its
own block outline
 The regulator will assess the bid made by this operator, call
in any competing bids and, finally, decide whether to grant
it or not
 OALP permits every company to study and specialize in
certain geographies if they so wish, making the entire
country open for E&P. Right now, companies are limited to
what the DGH puts out
 Companies can extend their block boundaries if they find
that the hydrocarbon channels in their designated blocks
are extending to nearby underground rock layers, and the
adjoining areas are open

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 There can be two types of bidding in OALP
1. For Reconnaissance
2. For Exploration
 
 There shall be a provision to exit after reconnaissance phase
without any penalty or reward, as long as work program is
 completed. The other options shall be to continue
reconnaissance phase (say for R&D blocks) or enter
exploration.

 Subsequent program at the end of reconnaissance phase

(Further survey or exploration) shall require a separate bid.
To encourage proper bids, it shall be possible for a new
party to emerge winner and acquire and operate block.
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 First reconnaissance bidder who does not wish to exit but looses bid
and consequently right to continue (further survey or   explore), he
shall have a prior right to participate in further program. This is his
upside. In this case he does not get any other reimbursement.

 If the reconnaissance bidder wishes to continue (further survey or

explore) but looses the bid, he shall also have the alternate    option to
partially recover the cost of data from the winner. This shall be on a
predetermined formula. This amount shall be  permitted to be cost
recoverable for the new winner.

 Penalties for non completion of work program shall be similar to the

prevalent NELP regime

 Force Majeure conditions need to be revised, as the current terms are

seen to be too heavily weighed in favor of Government.

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If the Reconnaissance Company “R” looses the
Exploration bid, it has the option of exercising either
of following options as a prior right
1. Reimbursement of Standard Cost of Work done
2. Participate in the block as a non-operator

At least 4 weeks before the end of contract period,

the operator shall submit to DGH the data

Bid Evaluation Criterion for Exploration Bids shall

be same as for NELP

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Area Bid
The bid shall be for contiguous area only, and shall be
built up on multiples of grid specified by DGH.
Recommended grid size is 2’x2’

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Bid evaluation criteria(BEC) will be:-

 Technical capability of the proposed Operator(TC)

 Financial capability of the bidding
company/consortium(FS)
 Fiscal Package(FP)
 Work Programme(WP)

 For Shallow offshore and Onland areas: TC 6%,FS 4%,WP

60%,FP 30%
 For Deepwater: TC 9%,FS 6%,WP 55%,FP 30%

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Thank you

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