Question
Which of the following statements are true regarding the "Open Acreage Licensing Policy (OALP)"?
Select the correct answer using the code given below:
- The policy is for the oil and gas sector
- Any private developer can participate without experience in the oil and gas sector
- Private players can suggest to Government to put specific blocks on bid
- The policy is a part of the New Exploration Licensing Policy
Select the correct answer using the code given below:
Answer: Option B
Answer: (b)
The government of India in 2016 launched the Hydrocarbon Exploration and Licensing Policy (HELP) for the exploration and production (E&P) of oil and gas which will replace the New Exploration Licensing Policy (NELP). The following are some of the important features of the policy:
A uniform/single license to enable the EØ&P operators to explore and extract conventional and unconventional oil and gas resources including Coal Bed Methane, Shale Gas/Oil, Tight gas, Gas hydrates and any other resource which falls within the definition of "Petroleum" and "Natural Gas"
Open Acreage Licensing Policy (OALP): Earlier E&P operators were forced to bid for only those blocks which were chosen by the government. Now they can apply for particular areas/blocks they deem to be attractive to invest in, and the Centre will put those areas up for bids.
This is more attractive for prospective operators because, in the past, the blocks are chosen by the government often were large swathes of land or sea in which only a small fraction had hydrocarbon reserves. By offering companies the freedom to choose exactly the areas they want to explore, and their size, the government has a better chance to woo serious energy investors in an effort to help achieve a more cohesive framework of the country’s energy security.
The E&P operators will have to bid for the blocks based on a revenue-sharing model rather than profit sharing. Bidders will be required to quote % of revenue share to the Govt. in their bids which will be a key parameter for selecting the winning bid. In this model the operator will have to share the revenue with the government from the first year of production notwithstanding the operator is making a profit or loss.
This model does not require auditing of costs incurred by the operator but is riskier for investors as it requires sharing of the revenues with the government from the first year itself before the operators have recovered their costs and even if they are making losses.
National Data Repository, which is envisaged as a centralized database of geological and hydrocarbon information, in line with the Digital India initiative, will be available to all. Besides allowing potential investors to make informed decisions, this will open up a new sector in India.
There are a number of companies around the world that make it their business to simply explore hydrocarbon basins and sell the information they gather. The new initiative seeks to incentivise such prospectors.
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Answer: (b)
The government of India in 2016 launched the Hydrocarbon Exploration and Licensing Policy (HELP) for the exploration and production (E&P) of oil and gas which will replace the New Exploration Licensing Policy (NELP). The following are some of the important features of the policy:
A uniform/single license to enable the EØ&P operators to explore and extract conventional and unconventional oil and gas resources including Coal Bed Methane, Shale Gas/Oil, Tight gas, Gas hydrates and any other resource which falls within the definition of "Petroleum" and "Natural Gas"
Open Acreage Licensing Policy (OALP): Earlier E&P operators were forced to bid for only those blocks which were chosen by the government. Now they can apply for particular areas/blocks they deem to be attractive to invest in, and the Centre will put those areas up for bids.
This is more attractive for prospective operators because, in the past, the blocks are chosen by the government often were large swathes of land or sea in which only a small fraction had hydrocarbon reserves. By offering companies the freedom to choose exactly the areas they want to explore, and their size, the government has a better chance to woo serious energy investors in an effort to help achieve a more cohesive framework of the country’s energy security.
The E&P operators will have to bid for the blocks based on a revenue-sharing model rather than profit sharing. Bidders will be required to quote % of revenue share to the Govt. in their bids which will be a key parameter for selecting the winning bid. In this model the operator will have to share the revenue with the government from the first year of production notwithstanding the operator is making a profit or loss.
This model does not require auditing of costs incurred by the operator but is riskier for investors as it requires sharing of the revenues with the government from the first year itself before the operators have recovered their costs and even if they are making losses.
National Data Repository, which is envisaged as a centralized database of geological and hydrocarbon information, in line with the Digital India initiative, will be available to all. Besides allowing potential investors to make informed decisions, this will open up a new sector in India.
There are a number of companies around the world that make it their business to simply explore hydrocarbon basins and sell the information they gather. The new initiative seeks to incentivise such prospectors.
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