New licensing policy aims for 'big oil'

In a bid to attract "big oil" to India, the government is close to finalising an Open Acreage Licensing Policy (OALP), which gives companies a round-the-year window to pitch for oil and gas in blocks of their choice.

The launch of OALP will also make NELP VII the last New Exploration and Licensing Policy (NELP) round, an official in the Directorate General of Hydrocarbons (DGH) said.

The DGH is the nodal agency which oversees the NELP rounds.

Despite expectations to the contrary, large global oil companies have not participated in the last couple of rounds of the NELP.

"An open acreage policy will be much more attractive to us as we can choose the time of entering India's exploration sector, and also choose the blocks we want to explore," a senior Shell official said.

Shell, like British Petroleum, Chevron, Exxon, Petrobras and Total, did not bid for exploration blocks in earlier NELP rounds. 
 

NELP so far
	Blocks  offered	Blocks  bid for	Bids  received
NELP I	48	28	45
NELP II	25	23	44
NELP III	27	24	52
NELP IV	24	21	44
NELP V	20	20	69
NELP VI	55	52	165

The timing, to offer the auction of exploration blocks in India in June or July, does not suit most oil companies as they have already put in their capital expenditure on exploration into other areas across the world, the Shell official said.

"By July, we have already put in our annual planned expenditure for exploration in projects. That is one of the reasons why we are not able to bid in the auction in India," said an official of British Gas, which won one exploration block in NELP VI, in partnership with ONGC.

Government officials say the launch of the OALP is slated to take place soon. "We are working towards offering the open acreage policy together with NELP VII. However, that would involve lot of work as data for areas across the country have to be collected," an official at the Directorate General of Hydrocarbons (DGH) said.

Typically, open acreage licensing works better for countries where hydrocarbon resources are few. Although the Ministry of Petroleum maintains that India is well endowed in hydrocarbon reserves, it accepts that all the easy oil in the country has been discovered.

"The undiscovered hydrocarbon reserves are believed to be in difficult terrain, such as ultra-deep water areas. It makes more sense to give the companies flexibility in choosing their exploration area by offering them access to data for blocks around the year," a senior official in the oil ministry said.

The OALP allows investors a continuous window of exploration opportunities wherein they would have flexibility to choose the areas, where they intend to carry out exploration. All open acreages are put on a grid system and are available for offers by interested companies.