Government bids eight hydrocarbon blocks at OALP-7 auctions

The Union Government on Friday launched the seventh round of Open Space Licensing Program (OALP) auctions, offering eight blocks spread over approximately 15,766 square kilometres. The blocks shown in the final round include five on land, two of shallow water and one block of very deep water.

This will be the fourth round of OALP auctions after the Cabinet, in February 2019, modified the revenue-sharing model for hydrocarbon exploration and restricted the government’s share of revenue to 50%. The deadline for submitting a bid is February 15, 2022.

Seven of the eight blocks shown are in “Class 1” basins, which do not have the incentives and incentives like the blocks in Class 2 and 3 basins – which are unexplored and do not contain much geoscientific data. 2019 Cabinet decisions said that contractors bidding for blocks in Category 2 and 3 basins would only pay royalties and legal fees and would not have to share any revenue unless windfall gains were made. To attract more players, royalty franchises are also offered if production begins within set timelines.

In the last two rounds of the OALP auctions, the state-owned Oil and Natural Gas Company (ONGC) and Oil India were the largest participating bidders. Among the private players, only Invenire Petrodyne participated in the fifth round, while Sun Petrochemicals was said to be the only exhibitor in the sixth round. No special player participated in the fourth round of OALP as all 7 blocks shown were awarded to ONGC.

In the first three rounds, Vedanta was awarded 51 blocks and one block went to the joint venture between BP Exploration and Reliance Industries. The government recently said that it wants to increase domestic production of oil and gas “significantly” and “for these private sector companies can participate as partners or through different business models so that new technologies and technologies can be introduced through these companies that have experience in this.”

A total of 105 exploration plots covering 1,56,580 square kilometers were awarded in the first five bidding rounds of OALP. As of August, exploration activities were actively carried out in 89 blocks. Commercial production of crude oil from OALP blocks has not started yet. Domestic crude oil production meets only about 15% of the country’s requirements. The country’s crude oil production of 30.5 million tons in FY21 was 5.6% lower than production compared to the same period last year. Production of 14.9 metric tons in April-September decreased 3.2% year-on-year.