NEW DELHI, May 11 (UPI) -- Aimed at inviting global energy giants into the Indian exploration sector, the country has formulated a new open acreage licensing policy, which allows foreign firms to bid for oil and gas blocks of their choice.
The new policy would replace India's decade-old new exploration and licensing policy, which is now in its seventh round. The eighth round of NELP under which oil and gas blocks will be auctioned to both domestic and global private and state-run energy companies will be conducted under the provisions of the new OALP.
The Ministry of Petroleum and Natural Gas has formulated the new policy and the Directorate General of Hydrocarbons has been appointed as the nodal agency for the implementation of the new policy.
"The government has planned the new policy, as no global oil and gas giant has shown any interest till now in all the rounds of the new exploration licensing policy," said Rakesh K. Joshi, a senior energy analyst. "Even the Petroleum and Natural Gas Ministry's efforts to attract international energy majors through road shows organized in Europe and the United States have not yielded any results."
India set up NELP in March 1997, offering 195 oil and gas blocks for auction over six rounds so far. No foreign energy firm participated because they are forbidden from bidding on blocks of their choice. A large number of blocks with high potential were given mostly to government-controlled companies and domestic private energy giant Reliance Industries Ltd.
Global energy companies wanted to bid for only those blocks where there is high potential of oil and gas reserves.
The new plans remove those stumbling blocks.
Global majors such as Shell, BP, ExxonMobil, Chevron, Petrobras and Total welcomed the move.
"The new open acreage policy looks attractive to us because it provides us the opportunity to decide when to make entry into India's exploration sector. Besides, the new policy also gives us the right to bid for the blocks of our choice," a BP spokesman said.
Under NELP, the government offered blocks for auction in either June or July. These months don't suit international companies because by that time they have invested expenditure marked for exploration. In the new policy, global companies will be granted access to data for blocks they want year round.
One of the main reasons for a comparatively lower growth in the country's oil production is the absence of major discoveries of hydrocarbon resources in recent years.
"In view of the inherent risk of hydrocarbon exploration and high financial investment, it has been felt that the efforts of the two upstream national oil companies may not be adequate to achieve the target," said Vijayendra Kaul, former petroleum and natural gas secretary. "Hence, opening up of the acreages for active exploration by private or joint venture companies was considered necessary."
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