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Oil block auctions under Hydrocarbon Exploration Licensing Policy by early next year

Oil block auctions under Hydrocarbon Exploration Licensing Policy by early next year

India will likely begin auctioning its major oil and gas blocks early next year under its fresh Hydrocarbon Exploration Licensing Policy (HELP) that heralds a major shift from the previous policy by bringing in revenue sharing between companies and the government, offering companies the option to carve out blocks, and the freedom to market gas. 

"We are currently working on the procedures and the methodologies to help operationalise the new policy. This should be ready by early next year, which is when we will allow companies to bid under this," said an oil ministry official, who didn't want to be named. 

In March, the government notified the new hydrocarbon policy, replacing the NELP, or New Exploration Licensing Policy that guided Indian hydrocarbon space for more than a decade. 

Some of the key changes the new policy introduced include just one license for extraction of all forms of hydrocarbons, freedom to market gas, and a revenue-sharing system that puts an end to micromanagement by bureaucrats and the accompanying acrimony between the government and the contractor. 

The officials at the oil ministry and its technical arm, the Directorate General of Hydrocarbons, are now figuring out every operational detail for a smooth launch of HELP. 

The oil ministry is currently managing the auction of 67 small discovered oil and gas fields for which road shows are being organized in the country and abroad.

The policy for these small fields also offer freedom to market gas and a revenue sharing model and this bid round will test the key policy measures' attractiveness for investors. 

The experience gathered in holding the discovered small field bid round will come handy in preparing the most optimal procedure for operationalising HELP, the oil ministry official said. 

Once the procedure is ready, companies can submit an initial expression of interest indicating the area which they wish to take up for exploration. 

Following this, the government will put this area up for auction and the highest bidder will be granted the right to explore. Just because someone has first identified the area for exploration will not grant him any special right to obtain exploration license. 

His offer in terms of the share in project revenue to the government must exceed other participants' to win the bid. India needs to rapidly ramp up local production to slow its growing dependence on import that meets about 80 per cent of its requirement. 

Last year Prime Minister Narendra Modi set a target of cutting the crude oil import dependence to 67 per cent by 2022. 

Fuel consumption in the country rose about 7.8 per cent in the first quarter of this fiscal year on higher purchase of cars, increased transportation and cooking gas consumption in an expanding economy. 

Indian state firms, led by Oil and Natural Gas Corp, have been purchasing oil and gas assets overseas in search of national energy security but the country still needs to shore up domestic production base to maintain the reliability of supplies. 

States to get Centre’s financial support for free power scheme 

The Centre will extend financial support to states to enable them to offer new electricity connections free of cost to everyone. 

At present, electricity connections to only below poverty line (BPL) families are offered for free. A senior government official said the Union power ministry has proposed to extend the free connections scheme to all in line with the Centre's goal to achieve 24x7 power for all by March 2019. 

Rural Electrification Corporation (REC) is working on a scheme to provide long-term loans to states that agree to offer free new electricity connections. The scheme will be a key issue for discussion when Union power minister Piyush Goyal meets state power ministers during the two-day conference of power ministers starting October 7 in Gujarat. REC is working on a scheme for financing the power distribution companies so that they could release new electricity connections to households. .. 




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