Attraction of OALP as Pradhan signs 32 contracts

Vol 22, PW 20 (25 Jul 19) People & Policy

Actions speak louder than words.

For anyone who remembers the excruciating delays and problems associated with nine successive NELP rounds, the blistering pace at which the oil ministry has concluded three Open Acreage Licencing Policy (OALP) rounds comes as a welcome breath of fresh air. On July 16, the oil ministry proudly announced that by the end of 2019 up to 300,000-sq km onshore and offshore acreage will have opened up for E&P.

Contrast that with only 90,000-sq km in 2017. Speaking in Delhi at the RSC signing ceremony for winners of 14 blocks from OALP-2 and 18 from OALP-3, oil minister Dharmendra Pradhan credited OALP's success to a move away from cumbersome and legally fraught Production Sharing to investor-friendly Revenue Sharing Contract (RSC) terms embodied in the new Hydrocarbon Exploration & Licensing Policy (HELP).

These include nominal royalty rates, no cess, pricing and marketing freedom, year-round bidding, a single licence to explore oil, gas, CBM and shale "coupled with a transparent and swift award process." Add to this the freedom to carve out whatever acreage you want against the 'take-it-or-leave-it' approach in NELP and it's easy to see why OALP is so attractive - at least for cash-rich operators Vedanta, ONGC and Oil India.

Anyone who missed the first four OALP rounds has until November 15 to file an Expression of Interest (EOI) for the fifth round.