10. OIL

Upstream: Exploration and production policies

To address production declines from mature basins, the GoI has taken several measures to enhance exploration and production (E&P) of oil and gas in the country:

Hydrocarbon Exploration and Licensing Policy (HELP): Approved in March 2016 and implemented since July 2017, the HELP replaced the previous licensing policy, the New Exploration Licensing Policy (NELP), which was criticised for its narrow scope and long, burdensome procedures. The HELP unifies the permitting authority into a single register to grant licences for E&P and covers both conventional and non-conventional oil and gas resources. It also introduced pricing and marketing freedom.

Open Acreage Licensing Policy (OALP): The HELP introduced the OALP in 2017 to further encourage companies to seek permission for exploration of any block at any time by submitting an expression of interest. Previously, there were formal bidding rounds led by the GoI and E&P activities were limited to blocks approved by it.

The first round of the OALP was concluded in May 2018, with 76% of the total blocks awarded to private companies; 55 contracts were signed with 6 companies, of which two were private – Vedanta and HOEC – winning 41 contracts and 1 contract respectively.

The second and third rounds of the OALP were concluded in July 2019. Contracts were signed for 32 blocks with 6 companies, of which 3 were private companies. Vedanta and BP–RIL won 10 contracts and 1 contract respectively.

Under the OALP I, II and III, a total of 87 blocks covering an area of 118 280 km2 have been awarded so far; 61% of the blocks, equivalent to 51% of the awarded area, were won by private companies, mainly Vedanta (51 blocks), HOEC (1 block) and BP–RIL (1 block).

National Data Repository: In support of the OALP, the government launched the National Data Repository in June 2017. It is a comprehensive archive of geo-scientific data for E&P activities. By allowing companies to access the data through an e-platform and consult relevant information, the government helped the interested parties in making bidding decisions.

Discovered Small Field Policy: Launched in 2016 with an objective to tap unmonetised small oil/gas discoveries in India, Discovered Small Field provides an easy and low-risk investment option for interested parties to encourage E&P activities. Bid round 1 was completed in a record time of 10 months, with 134 bidders for 34 blocks on offer; 30 contracts were awarded to 20 companies, of which 13 were new players in the E&P sector. First oil/gas is expected in 2019/20. In August 2018, for bid round 2 the GoI offered larger areas in commercially producing basins (MoPNG, 2018). A total of 40 companies participated: 29 private, 6 foreign and 5 central public-sector enterprises. In the end, 23 contracts were awarded, of which 15 were to private companies.

Enhanced recovery and unconventional hydrocarbons are supported by the government’s policy incentives, including systemic assessment of domestic fields with enhanced recovery potential, evaluation of enhanced recovery techniques, and fiscal incentives to alleviate the risk factors and costs associated with enhanced recovery projects.

The HELP marked an important transition from regulation to liberalisation of India’s E&P sector; it is a very significant upstream reform of the fiscal regime. Despite this positive progress, India’s growing oil demand is unlikely to be met by new production alone given the country’s limited resource base.

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ENERGY SECURITY

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