Open Acreage Licensing Policy (OALP)

GS Paper III Indian Economy

Context:

The government is expected to open the ninth round of bidding under the Open Acreage Licensing Policy.

Open Acreage Licensing Policy (OALP) is a policy reform introduced by the Government of India (GoI) to provide relief to hydrocarbon companies.
Under it the company can undertake prospecting for fuels in areas the GoI does not notify.
- Prospecting refers to drilling the selected area to check the availability of hydrocarbon fuels.
The OALP is used by companies engaged in extracting hydrocarbon fuels to locate new areas where hydrocarbon fuels can be obtained.
Under the Open Acreage Licensing Policy, Companies can put in an expression of interest (EoI) for any area throughout the year but such interests are accumulated thrice in a year. The areas sought are then put on auction.
It is part of the Hydrocarbon Exploration and Licensing Policy.

Hydrocarbon Exploration and Licensing Policy (HELP)

HELP is an exploration and production policy of the Government of India that replaced the New Exploration Licensing Policy (NELP).
Objective: To enhance domestic oil and gas production by intensifying exploration activity and investment.
Four Components of HELP;
- Uniform license for exploration and production of all forms of hydrocarbon: This streamlines licensing, as the government requires only a single uniform license for all forms of hydrocarbons, which includes gas from coal mining.
- Open acreage licensing policy: Through this, an explorer can study and bid for any block in accordance with its competitive advantage.
- Revenue sharing model: This encourages cost efficiency in mining operations by replacing the profit-sharing contract established by NELP. The contractor pays the government a share of its revenue (net of royalty) as per the contract.
- Marketing and pricing freedom: The contractor can sell crude oil in the domestic market through a transparent bidding process.