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Government to offer incentives to companies keen on developing oil and gas blocks
The government will offer incentives to companies that take lead in proposing to develop oil and gas blocks of their choice leading to a government-monitored auction, according to the draft Open Acreage Licensing Policy (OALP).
Besides encouraging companies to propose blocks for auction through the year, the open acreage policy will also keep alive the previous practice of the government carving out blocks and offering them to investors in an auction round. “The Directorate General Hydrocarbon (DGH) will also administer, when deemed necessary, rounds of awards of blocks carved out by the DGH, for contracting in addition to the option available to investors to make suo motu applications under OALP,” says the draft policy.
Open acreage licensing is part of the Hydrocarbon Exploration Licensing Policy (HELP) unveiled last year. The DGH, an arm of the oil ministry, has now drafted the procedure to operationalise the OALP.
The DGH maintains a national data repository that investors can access to study hydrocarbon data and determine their interest in specific blocks. Investors can then apply for a specific area for either reconnaissance contract that permits exploration for two years, or petroleum operations contract for 20 years, including an initial exploration phase of six years, according to the draft OALP. An investor’s expression of interest must be accompanied by a bank guarantee of $1 million for petroleum operations contract and half a million dollars for reconnaissance contract.
The government will accept an expression of interest from investors in two six-monthly windows– ending in June and December — following which the interests will be evaluated, and if found fit will result in an open bidding overseen by the DGH.
All bidders will be evaluated on technical and financial criteria. The maximum marks in technical evaluation available to an ordinary bidder is 90 under reconnaissance contract, but the investor submitting the expression of interest leading to this bid will get additional 10 marks, as per the draft OALP. Similarly, in petroleum operations contract, the one that first expressed interest gets five marks over and above the maximum 65 marks other bidders can aim for in technical evaluation. There is no incentive available in financial bids.
The government will also incentivise investors transitioning from Reconnaissance to Petroleum Operations Contract. “Operator of the Reconnaissance Contract will be, in the event of failing to win that particular bid, allowed to match the financial and technical bid of the highest bidder,” as per the draft OALP. Jerome Bettis Jersey
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