Overhauled oil policy to apply from 4th bid round: DGH

New Delhi:  The overhauled oil and gas exploration licensing policy will be implemented from the 4th bid round, likely sometime in June or July, the Directorate General of Hydrocarbons (DGH) has said.

Junking two-year-old revenue bidding model for award of acreage for exploration and production of oil and natural gas, the Union Cabinet had in February approved a policy for awarding blocks based primarily on exploration commitment such as drilling of wells.

This was aimed at attracting the elusive private and foreign investment to raise domestic output.

"Parameters of new policy reforms published vide resolution dated February 28, 2019 shall apply from OALP-IV onwards only," the DGH said in a notice.

Oil and gas blocks for exploration are bid out under Open Acreage Licensing Policy (OALP). 2nd and 3rd round of OALP bidding is underway with last date of bidding set for May 15. The fourth round is expected by end June or July, official sources said.

Under OALP, companies are allowed to put in an expression of interest (EoI) for prospecting of oil and gas in any area that is presently not under any production or exploration licence.

The EoIs can be put in at any time of the year but they are accumulated twice annually. The two windows of accumulating EoIs end on May 15 and November 15 every year. EoIs accumulated till May 15 are supposed to be put on auction by June 30 and those in the second window by December 31.

With the notice, DGH attached the official notification that overhauled the exploration policy.

Breaking from the two-and-a-half decade old practice of having a uniform contractual regime for all sedimentary basins in the country, the new policy provides for different rules for areas that already have producing fields and ones where commercial production of oil and gas is yet to be established.

Irrespective of the basins, producers will get complete marketing and pricing freedom for oil and gas in future bid rounds, said the notification detailing rule changes approved by the Union Cabinet on February 28.

Oil and gas acreage or blocks in all future bid rounds will be awarded primarily on the basis of exploration work commitment, it said.