India Signs Contracts for 32 Oil, Gas Blocks
India’s ministry of petroleum and natural gas July 16 signed revenue sharing contracts for 32 blocks awarded under Open Acreage Licensing Programme (OALP) bid round-2 and round-3.
Following the contract signing of 55 blocks under OALP bid round-I, the government launched OALP bid round-2 on January 7, 2019 offering 14 blocks. The third round was launched in February this year. Subsequent to evaluation, a total of 32 blocks were approved for award to six companies.
State-owned Oil India has won the maximum number of licences for oil and gas exploration blocks offered under Open Acreage Licensing Policy (OALP) round-2 and round-3, Indian upstream regulator Directorate General of Hydrocarbons (DGH) said earlier this month. Oil India won 12 licences while another state-owned company ONGC won eight licences. Private firm Vedanta was awarded 10 blocks.
"In some ways, this marks the end of the first phase of the OALP era. The government has improved the fiscal parameters for blocks that will be available starting with OALP-4. This is in response to the lack of IOC participation so far and a potential flaw in the original revenue-sharing mechanism. More importance has also been given to work programmes rather than the revenue shared with the government,” Wood McKenzie analyst Alay Patel said in a note published July 17.
"These changes will move the needle but are unlikely to be game changers as globally exploration budgets have shrunk and competition is fierce. India's prospectivity pales in comparison to opportunities available in many other regions," he added.
The OALP was launched by Indian oil and gas minister Dharmendra Pradhan in June 2017. According to India’s oil and gas ministry, the OALP adopts all the features of Hydrocarbon Exploration and Licensing Policy (Help): reduced royalty rates; no oil cess (an extra tax); a uniform licensing system; marketing and pricing freedom; revenue-sharing model; and exploration rights on all retained area for the full contract life.