OALP – II Auctions

Prelims level : Economy Mains level : Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
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In News:

  • The government is expecting about ₹40,000 crore of investment in the 14 blocks it put up on auction for prospecting of oil and gas in the second round of open acreage licensing policy (OALP).


  • India had in July 2017 allowed companies to carve out blocks of their choice with a view to bringing about 2.8 million sq. km of unexplored area in the country under exploration,
  • Under this policy, called open acreage licensing policy or OALP, oil 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 on offer in OALP-II include one in deep waters of Krishna Godavari basin and five shallow water blocks – two each in Andaman and Kutch basin and one in Mahanadi basin. Eight on land blocks – four in Mahanadi basin, two in Cambay and one each in Rajasthan and Cauvery are on offer.
  • Blocks are awarded to the company which offers the highest share of oil and gas to the government as well as commits to do maximum exploration work by way of shooting 2D and 3D seismic survey and drilling exploration wells.
  • Increased exploration will lead to more oil and gas production, helping the world’s third largest oil importer to cut import dependence. Prime Minister has set a target of cutting oil import bill by 10 per cent to 67 per cent by 2022 and to half by 2030.
  • India currently imports 81 per cent of its oil needs. The new policy replaced the old system of government carving out areas and bidding them out.
  • It guarantees marketing and pricing freedom and moves away from production sharing model of previous rounds to a revenue-sharing model, where companies offering the maximum share of oil and gas to the government are awarded the block.
  • In the first round of OALP last year, as much as ₹60,000 crore was committed in the exploration of oil and gas in 55 blocks or areas
  • A third round of OALP with 12 oil and gas blocks and five coal-bed methane (CBM) blocks would be launched in January. The 14 blocks offered in OALP-II bid rounds cover an area of 29,333 square kilometer
  • Since 2014, the Centre has held two auctions of discovered small fields and two auctions under OALP. Cumulative investment committed is ₹1, 20,000 crores.
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