Petroleum Minister Dharmendra Pradhan on Wednesday introduced a new oil and gas block licensing policy that is expected to open up 2.8 million square kilometres of sedimentary basins to exploration and production activities.
The Minister was speaking at the inauguration of the government’s Open Acreage Licensing Policy (OALP) and the National Data Repository.
He added that the lack of seismic sedimentary basin data has been hampering the oil and gas exploration and production sector and that 52% of India’s sedimentary basins have not been appraised yet.
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The National Data Repository is expected to improve this situation, he said.
Option to select
The OALP, a part of the government’s Hydrocarbon Exploration and Licensing Policy (HELP), gives exploration companies the option to select the exploration blocks on their own, without having to wait for the formal bid round from the Government. The company then submits an application to the government, which puts that block up for bid.
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The new policy will open up 2.8 million square kilometres of sedimentary basins for exploration and eventual production. Mr Pradhan said that initially the applications and related bids for the blocks would be held twice a year —in January and July — but said this could become more frequent as the industry becomes used to the new model.
“OALP is a fundamental shift and a very transformative step in India's E&P history,” Sudhir Mathur, Acting CEO of Vedanta Cairn Oil and Gas said. “This policy reiterates GoI’s commitment to reduce administrative & regulatory burden, thus enhancing ease of doing business.”
“A single license to explore all forms of hydrocarbons, no oil cess, reduced rates of royalty are just few of the many enabling provisions which will stimulate investments in the sector,” Mr. Mathur added. “This decision will go a long way towards reducing import dependence and achieving India's quest for energy security.”
Investment appetite
Mr. Pradhan added that the recently-concluded discovered small field (DSF) bid round, though small, was encouraging as it gave an insight into the investment appetite of the sector.
“The new policy environment has already started attracting investment into India’s upstream sector, which could help reduce imports and increase the share of gas in the country's energy mix,” Chandrajit Banerjee, Director General, Confederation of Indian Industry said.
During his speech, Mr. Pradhan said that his Ministry was working on developing a gas trading hub to support a robust marketing network.
“Steps should be taken to develop a South-East Asian natural gas hub in India, which would provide a fair price for domestic natural gas through gas-on-gas competition and help eliminate price vulnerabilities arising from the oil-indexed nature of LNG import contracts,” Mr. Banerjee said.
“About 52% of India’s sedimentary basins are unappraised, with the last appraisal taking place 25 years ago,” Mr. Pradhan said during his speech. “The lack of seismic sedimentary basin data was hampering the exploration and production (E&P) sector of the oil and gas industry.”