(TH)
July 1 will not only be about the biggest indirect direct tax reform — the Goods and Services Tax — but also about a new kid on the block in India’s hydrocarbon space: Open Acreage Licensing, which allows companies to cherry-pick their own areas for exploration. Like GST, OAL, another policy initiative of the previous UPA government, will be offered under the Hydrocarbon Exploration Licensing Policy. OAL will also mean the end of the story for the existing auction mechanism, the New Exploration Licensing Policy (NELP).
Officials associated with the process say that if the trial run is anything to go by, OAL has already attracted the Exxons of the world, who have been keeping India low on their oil and gas exploration priority list.
However, a question being asked is why the government is going ahead with OAL now, when blocks awarded under NELP, including the controversial Reliance Industries-BP Krishna Godavari Basin-D6 block, are showing results? Since NELP was introduced in the late 1990s, 314 blocks have been offered, of which 254 have been awarded. Besides, at present, most of the producing blocks in the country are those that have been offered before NELP or after NELP.
OAL is intended to cut the red tape and plug the gaps in the NELP model, a senior official in the Ministry for Petroleum and Natural Gas told BusinessLine. A prerequisite for OAL is the National Data Repository (NDR) to be unveiled by Finance Minister Arun Jaitley on June 28.
“All the data will be made available on NDR, which will be the backbone of OAL. To be manned by the Directorate-General of Hydrocarbons, OAL will offer 2.7 million sq km of Indian sedimentary basin out of the total 3.14 million sq km available in NDR,” the official added.
