Flames burn off at an oil processing facility. (Photographer: Simon Dawson/Bloomberg)

OALP: India Launches Third Round Of Oilfield Auctions

The union government has launched the third round of oilfield auctions under the Open acreage Licensing Programme as India aims to cut oil imports by 10 percent by 2022 to reduce its import bill.

Twenty three blocks, with an exploration area of 32,000 square kilometers are on offer in this round, which is also open to international bidders. These include 19 on-land blocks, three shallow water blocks and one deep water block.

The auction of 18 blocks will be based on expressions of Interest submitted by the bidders whereas five blocks, where coal bed methane is the primary target, "have been carved out by the government suo motu with a view to augment Coal Bed Methane exploration and production in India," a press statement by Ministry of Petroleum and Natural Gas said.

Bidders will be able to bid online starting tomorrow and upto April 10, 2019. The ministry statement said this OALP round III is expected to generate immediate exploration work of around $600-700 million.

The Open Acreage Licensing Programme was launched with an effort to offer more liberal and attractive terms to bidders including a single license for exploration and production of all forms of hydrocarbons, including shale  and the ability to carve out their own blocks. It also provides a simplified revenue-sharing model along with marketing and pricing freedom. The older NELP model had a profit-sharing structure, allowing companies to first recover their capital and operating expenditure before sharing the profits with the government.

So far the the OALP has received lacklustre response from international oil companies. The first round of OALP auctions was launched by the government in January 2018. It received 110 bids for 55 blocks with 59,282 sq km on offer. All 55 blocks were awarded to winning bidders in October 2018.

Nine Indian companies — four private and five state-run — submitted 110 bids in the first round of the online auction.

The second OALP bid round was launched on Jan. 7, 2019, wherein 14 blocks with an area of approximately 30,000 sq km are on offer. Bidding under OALP round-II will continue till March 12, 2019 and the award of the blocks is expected by the end of May 2019.

The ministry statement said the successful roll out of  OALP has helped expand exploration acreage from approximately 90,000 sq km in 2017 to 1,50,000 sq km after OALP I and will touch 2,10,000 sq km after OALP round II and III bidding exercises are completed by May 2019. Another two rounds of bidding are slotted for this calendar year after which the exploration acreage will have expanded to 3,00,000 sq km.

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