It’s high time for an open acreage licensing policy

As energy consumption burgeons with economic development in India, the widening gap between demand and supply of oil and gas, coupled with stagnating domestic production, has increased India’s dependence on imports. Despite the clear need to increase domestic production, it has languished in recent years. Part of the solution lies in evolving a policy framework that will intensify domestic exploration and an open acreage licensing policy (OALP) may just provide that framework.

Numbers under NELP

The New Exploration Licensing Policy (NELP), launched in 1999, introduced international competitive bidding for oil and gas exploration blocks. Under the nine rounds of bidding under NELP, 254 oil and gas blocks have been awarded, and 128 hydrocarbon discoveries have been made in 42 of the blocks. Although NELP has given a big boost to exploration, the dwindling number of production sharing contracts signed in the last two NELP rounds, and the general lethargy in foreign investments and technology transfer, indicate waning investor interest in the NELP process, making it necessary to formulate alternative policies to accelerate exploration in India.

Year-round mechanism

Less than 50% of India’s sedimentary area (onland and offshore) of 3.14 million square kilometres has been awarded. Vast sedimentary basins remain unexplored or poorly explored, and OALP, which has been doing the rounds for a long time, may be what is needed to allow investors a continuous window of exploration opportunities.

Saurabh Bhasin is a partner at Trilegal and Rashi Ahooja is an associate. Trilegal is a full-service law firm with offices in Delhi, Mumbai, Bangalore and Hyderabad.