Request you to kindly drop in all your mails/queries to support@infraline.com or call us at
+91-120-6799125 (D); +91-120-6799100 (B)

Open Acreage Licensing Policy (OALP) - A mirage? Need to transform it into Reality, Dr V K Rao, Sr. Vice President & OSD, RNRL

Introduction

The widening gap between demand and indigenous supply coupled with stagnating domestic production of crude over the years has increased India's dependence on imports. Needless to say that this makes the economy highly suscepatble to fluctuations in international crude prices which could be due to supply disruptions, geo-political strategies and military events etc. Thus the real solution lies in intensifying our exploratory efforts through many mechanisms and policy initiatives.

The earliest effort by India at attracting foreign investments and technology was in mid-1970s when two companies viz; Carlsberg of USA and Reading & Bates of Canada participated in exploration of offshore areas but were not successful. Government of India floated 4 Exploration Rounds Between 1980 and 1991 followed by another 5 exploration rounds between 1993-95 without much success.

After thorough analysis, deliberations and inter ministerial consultations, the most important policy decision was taken by Government of India to announce New Exploration Licensing Round (NELP) offering lot of incentives and attractive fiscal and contractual terms. The First round of offer was announced in 1999 and till date eight NELP rounds have been offered and the 9th NELP round is announced in October 2010.

Introspection of NELP Rounds

Under NELP-I through NELP-V rounds for which PSCs were signed between 2000 and 2005, a total of 40 Deep Water blocks,32 shallow offshore blocks and 38 onland blocks were awarded, out of 47 Deep water blocks, 44 shallow water blocks and 53 onland blocks announced for offer. (see Table). Of these, till date 12 Deep water blocks, 19 shallow water blocks and 6 onland blocks have been relinquished by the Companies. Most of the offshore blocks relinquished are located in the western offshore waters. Many of the frontier onland blocks did not evoke interest and thus were unbid. Again , under NELP-VIII round the global investor response declined as can be seen from the poor response received. Although NELP has given a big boost to exploration activity in terms of upgradation of perceived Indian geology, potential of deep waters off Krishna-Godavari Basin in particular, exposure to International upstream community, it has not achieved its full potential and objective in attracting global majors, cutting edge technology transfer and opening up frontier basins with innovative technologies. Thus it is time to introspect and then move on to Open Acreage Licensing Policy (OALP).

NELP Round Blocks announced/Awarded Blocks Relinquished
DW SO OL DW SO OL
NELP-I 12/7 26/16 10/1 - 12 1
II 8/8 8/8 9/7 8 6 4
III 9/9 7/6 11/8 1 1 1
IV 12/10 1/0 11/10 1 No award- -
V 6/6 2/2 12/12 2 - -
Total 47/40 44/32 53/38 12 19 6
VI 24/21 6/6 25/25 No relinquishment is due
VII 19/11 9/7 29/23
VIII 24/8 28/13 18/13
114/72 87/58 125/99

Open Acreage Licensing Policy (OALP)

The 26 sedimentary basins of India ,including offshore part cover an areal extent of 3.14 MM sq kms. Of these only 15 basins are explored till date. The unexplored /poorly explored part encompass an areal extent of 1.069 MMsq kms and in another 1.384 MM Sq kms exploration has been initiated.

The Open Acreage Licensing Policy has been adopted by countries like France, Thailand, Malaysia, UK and Pakistan.

The OALP system offers opportunity to investors to evaluate acreages round the year and carve out their own areas with perceived work programme commitments. The advantages of OALP are:

  • Provides continuous window of opportunity to bid for acreages at pre-determined intervals of time
  • The liberty to choose acreages in pre-demarcated multiples of geodetic grids and design work programmes
  • Open all year round thus time constraints to bid are removed
  • Allows in depth study of data including the regional data
  • Possibility of collaborative ventures in data gathering, R &D with Government Agencies/Private companies

Although DGH /MoPNG has embarked on OALP as far back as in 2004, it has not taken off as expected/planned. Oft repeated announcements in different forums with no take off dates may not be conducive. The most important pre-requisite for its implementation is the establishment of robust National Data Repository (NDR) followed by adoptable policy initiatives and attendant incentives to the investors.

Suggestions / Recommendations

  1. Time lines may be drawn to establish Robust National Data Repository integrating all the Data available for the basin/region/geographic province.
  2. Identify the data gaps and draw plans to fill them up wherever possible.
  3. In case, developing NDR for the entire Country has some time constraints and other issues ,alternatively NDR for a particular Basin/ Region/ Province etc can be first attempted viz; Ganga Basin, West offshore or North East.
  4. It would have been prudent to initiate OALP for a particular basin/area alongwith NELP-IX bid round concurrently. This would have tested the investor response/receptivity to the new Policy.
  5. It is advisable to seek co-operation and guidance from the countries which have adopted this type of Policy.
  6. Since NELP rounds have become repetitive and have started showing waning interest, alternate policy initiatives are required to accelerate our exploratory ventures.