Context (PIB): The Ministry of Petroleum and Natural Gas initiated the 9th bidding round under the Open Acreage Licensing Policy (OALP).
OALP was launched in 2016 under Hydrocarbon Exploration and Licensing Policy (HELP).
Under the Open Acreage Licensing Policy, Companies can put in an Expression of Interest (EoI) for any area throughout the year but such interests are accumulated thrice in a year.
The Government will examine the interest and if it is suitable for award, then the government will call for competitive bids after obtaining necessary environmental and other clearances.
Successful implementation of OALP requires building of National Data Repository.
National Data Repository (NDR)
Operational since 2017, it is a centralized database of geological and hydrocarbon information.
It provides reliable exploration and production data allowing potential investors to make informed decisions.
It functions under Ministry of Petroleum and Natural Gas.
Hydrocarbon Exploration and Licensing Policy
Approved in 2016, it replaced the erstwhile New Exploration Licensing Policy (NELP).
Main aspects of HELP
Open Acreages: Freedom to investors for carving out blocks of their interest (OLAP).
Single, uniform licensing system to cover all hydrocarbons (ie. Conventional and Unconventional hydrocarbons) under a single licensing framework, instead of the present system of issuing separate licenses for each kind of hydrocarbons.
Shift to Revenue sharing model from profit sharing model/production sharing contract model (PSC).
Marketing and Pricing Freedom: Only subject to a ceiling price limit.
Conventional hydrocarbons: oil, gas.
Unconventional hydrocarbons: Coal bed methane, Gas Hydrates, Oil sands, shale oil etc.
Revenue Sharing Contracts Model
It is seen as a better alternative to OALP and NELP.
The government gets a share in revenue from the very beginning.
In contrast, PSC (Production Sharing Contracts) allows the government to have revenue share only after costs are recovered by the explorer.
In PSC, explorers inflate investment by classifying revenue expenditure (salaries, maintenance etc.) as capital expenditure (equipment, technology, etc.).
This resulted in a lower government share & delays revenue to the government by decades.
