In line with the Government initiative of ease of doing business, the Union Cabinet chaired by Prime Minister Shri Narendra Modi has given its approval for delegating the powers to Minister of Petroleum and Natural Gas and Finance Minister to award the Blocks/Contract Areas to successful bidders under Hydrocarbon Exploration and Licensing Policy (HELP) after International Competitive Bidding (ICB) based on the recommendations of Empowered Committee of Secretaries (ECS). Under HELP, Blocks are to be awarded twice in a year. Therefore, this delegation of powers will expedite the decision-making process on awarding blocks and give a boost to the initiative of ease of doing business.
Under the NELP Policy, ECS considers the Bid Evaluation Criteria (BEC), conducts negotiations with the bidders wherever necessary and make recommendations to CCEA on the award of blocks. The CCEA approves the award of blocks. The entire process, including Inter-Ministerial Consultations (IMC), is quite lengthy and time-consuming. In consonance with the Government initiative of ‘Ease of Doing Business’, it is desirable to shorten the duration of time taken for the award of the Blocks / Contract Areas.
Under the New Hydrocarbon Exploration and Licensing Policy,’ the competitive bidding will be continuous and blocks will be awarded twice a year.
About Hydrocarbon Exploration and Licensing Policy (HELP):
The government of India launched a new policy regime for Exploration & Production (E&P) sector namely Hydrocarbon Exploration and Licensing Policy (HELP) in 2016 which is a paradigm shift from earlier policy regime.
The main features of new Policy regime are Revenue Sharing Contract, single Licence for exploration and production of conventional as well as unconventional Hydrocarbon resources, marketing & pricing freedom, etc.
Open Acreage Licensing Policy (OALP) under HELP, is main innovative feature wherein investor can carve out Blocks of their own interest and submit an Expression of Interest (Eol) throughout the year. Based on the areas for which expression of interest has been expressed bidding will be conducted every 6 months.
What was the need for the new Hydrocarbon Exploration and Licensing Policy (HELP)?
India is the 3rd largest consumer of crude oil and petroleum products with oil and gas contributing 34.4% to primary energy consumption. In 2015-2016, India’s crude oil import dependence rose to 81% from 78.5%. In last five years, India has seen an overall decline in exploration and production of conventional resources. New Exploration Licensing Policy (NELP) created in 1997 ended the state dominance and created a competitive environment leading to liberalization of oil and gas exploration and production industry. However, it failed to keep the momentum of production growth and attracting the foreign investment.
Bureaucratic hurdles like multiple approvals and sanctions, cost overruns, and disputes led to some oil majors leaving their awarded blocks and exit from the space.