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Govt signs contracts with OALP II & III winners, hopes to attract $1 billion investment

Speaking on the occasion, Pradhan said increasing the production of crude oil and gas is the priority of Modi 2.0 government
New Delhi: The Ministry of Petroleum and Natural Gas (MoP&NG) signed contracts for 32 blocks awarded under Open Acreage Licensing Programme (OALP) bid rounds II and III on Tuesday. India hopes to attract more than $1 billion of investment in exploration and production blocks awarded to companies under OALP, petroleum minister Dharmendra Pradhan said.

‘Increasing production is priority’

Speaking on the occasion, Pradhan said increasing the production of crude oil and gas is the priority of Modi 2.0 government. He said that the country already has a network of refineries and a robust marketing setup, and the exploration and production (E&P) sector is expected to come up in a big way. “Today’s award of OALP contracts is a step in that direction,” Pradhan added. He said that India is going to become a $5-trillion economy and energy security, availability and accessibility are essential for this. The Union minister said that the last five years have been a journey of continuous policy reforms and bold decisions, as the country moved from production sharing to revenue sharing and now reached maximum work commitment programme in the E&P sector — all these are intended to increase production. He assured the successful bidders of OALP rounds that all issues can be solved through discussions and consultations and added that they should not delay the projects at all.

The winners

While Oil India Ltd had bagged 12 out of the 32 oil and gas exploration blocks that were up for grabs, Vedanta Ltd walked away with 10 and Oil and Natural Gas Corp (ONGC) got eight blocks. Vedanta walked away with the most number of oil blocks (51) if the blocks won by the company in the three rounds are combined.

The backdrop

The government had launched OALP rounds II and III on January 7 and February 10, respectively. While 14 blocks (covering a total area of approximately 30,000 square km) were offered in round II, the round-III offered 23 blocks, including five CBM blocks (covering a total area of approximately 32,000 sq km) under International Competitive Bidding (ICB) process. The bidding for both these rounds closed on May 15. Subsequent to the evaluation, a total of 32 blocks were approved for award to six companies, for which revenue-sharing contracts were signed on Tuesday. The total area awarded in the 32 blocks is 58,998 sq km (onland- 31,551 sq km; offshore 27,447 sq km).

The first round

The first OALP round was launched by the government in January 2018, and had received overwhelming success with 110 bids for 55 blocks, covering 59,282 sq km area. All the 55 blocks were awarded in October 2018 and the operators of these blocks have since initiated petroleum exploration activities or are in the final stages of obtaining Petroleum Exploration Licenses (PELs). The first oil/gas from these blocks is expected before 2023.