Economics Prelims cum Mains

FM, petroleum minister can now award oil, gas blocks

Details :

The News

  • The Union Cabinet approved delegation of powers to Minister of Petroleum and Natural Gas and Finance Minister to award the oil and gas blocks.

 

New summary:

Earlier procedure for block allocation:

  • Earlier, under the New Exploration Licensing Policy (NELP), Empowered Committee of Secretaries (ECS) considers the Bid Evaluation Criteria (BEC), conducts negotiations with the bidders wherever necessary and make recommendations to Cabinet Committee on Economic Affairs (CCEA) on award of blocks.
  • Based on ECS recommendation, the CCEA approves the award of blocks.
  • The entire process, including Inter Ministerial Consultations (IMC) is quite lengthy and time consuming.
  • In consonance with the Government initiative of ‘Ease of Doing Business’, it is desirable to shorten the duration of time taken for award of the Blocks / Contract Areas.

 

Changes made:

  • Now the Minister of Petroleum and Natural Gas and Finance Minister can award the Blocks/Contract Areas to successful bidders under Hydrocarbon Exploration and Licensing Policy (HELP) after International Competitive Bidding (ICB).
  • The delegation of power is for Open Acreage Licensing Policy (OALP) bid rounds under the Hydrocarbon Exploration and Licensing Policy (HELP).
  • Under OALP, Blocks are to be awarded twice in a year. Therefore, this delegation of powers will expedite the decision making process on awarding blocks and give a boost to the initiative of ease of doing business.

 

Additional information:

HELP:

  • Government of India launched a new policy regime for Exploration & Production (E&P) sector namely Hydrocarbon Exploration and Licensing Policy (HELP) in 2016.
  • HELP replaced the New Exploration Licensing Policy (NELP) where government carved out areas and bid them out.
  • The main features of new Policy regime are:
    • Revenue Sharing Contract,
    • Single Licence for exploration and production of conventional as well as unconventional Hydrocarbon resources,
    • Marketing & pricing freedom, etc.
  • Open Acreage Licensing Policy (OALP):
    • OALP under HELP, is main innovative feature wherein companies are allowed to put in an expression of interest (EoI) for prospecting of oil and gas in any area that is presently not under any production or exploration licence.
    • The EoIs can be put in at any time of the year but they are accumulated twice annually.
    • The blocks or areas that receive EoIs at the end of a cycle are put up for auction with the originator getting some advantage.

 

HELP vs NELP:

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