Union Government launched new bidding mechanism for mega oil and gas auctions

The Union Government on 28 June 2017 simultaneously launched two key interventions: a revamped oil and gas bidding mechanism named Open Acreage Licensing Process (OALP) and the National Data Repository (NDR) for the first major oil field auctions to be held from 1 July 2017.

The auctions will be held under a new Hydrocarbon Exploration Licensing Policy (HELP).

Arun Jaitely, Union Finance Minister, and Dharmendra Pradhan, Union Petroleum Minister, launched both the initiatives in a mega event in New Delhi.

New bidding mechanism:

• The new bidding mechanism will allow interested firms to bid for blocks of their choice at any time of the year with the help of National Data Repository.

• The NDR is a comprehensive database of India’s key sedimentary basins that will provide the bidders data on contract areas that will be available for auctioning.

• Under the mechanism, an investor will be allowed to put forth an Expression of Interest for undertaking contracts under Petroleum Operations Contract (POC) or Reconnaissance Contract (RC).

• The investor will have the liberty to apply for such contracts bi-annually. They may also participate in rounds of auctions conducted by the regulator DGH over and above the applications made under OALP.

• Under Reconnaissance Contract, parties may carry out exploration operations for a given block for all types of hydrocarbons, except for coal bed methane for a contract period of two years with a provision for an extension up to one year. The reconnaissance licensee will have the right to license the data acquired for a period of 12 years.

• An investor applying for RC will only need to have positive net worth as qualification criteria in order to be eligible to bid for RC rounds.

• In the evaluation phase, the bidder scoring the highest marks will be declared winner.

• The contractor who has won the RC bids and subsequently completed the RC term and wishes to migrate to petroleum operations contract will get the right of first refusal in the Petroleum Operations Contract auctions if it meets all the qualification criteria.

• Under POC, investors will be allowed to undertake exploration, development or production operations or any combination of such operations including construction, operation and maintenance of all necessary facilities and all other activities deemed to be necessary by the operator.

• The operator under POC will be allowed an initial exploration period of six years under a total contract period of 26 years.

• During the evaluation phase, the bidder scoring the highest marks will be declared the winner.