Why in news?
In early 2026 the Directorate General of Hydrocarbons extended the deadline for the tenth bid round of the Open Acreage Licensing Programme (OALP), drawing renewed attention to India’s exploration policy. OALP is a central element of the Hydrocarbon Exploration and Licensing Policy (HELP). It allows energy companies to select areas for exploration and production of oil and gas throughout the year and has offered nearly 2.7 million square kilometres of India’s sedimentary basins for bidding. Understanding its features and how it differs from earlier licensing regimes is important for energy and UPSC aspirants.
Background
Before 2017 India allocated exploration blocks through periodic bidding rounds under the New Exploration Licensing Policy (NELP). Critics argued that rigid auction schedules and extensive government control deterred investment and slowed the search for hydrocarbons. To revitalise the sector, the government introduced the Hydrocarbon Exploration and Licensing Policy (HELP). HELP brought in a revenue‑sharing model, freedom of pricing and marketing of natural gas, and a single licence covering all forms of hydrocarbons (oil, gas, shale and coal‑bed methane). A key pillar of HELP is the Open Acreage Licensing Policy (OALP), which allows investors to identify and propose blocks of interest instead of waiting for the government to announce predetermined blocks.
Key features of OALP
- Flexibility in block selection: Investors can carve out exploration areas using a minimum grid of 10×10 arc minutes (roughly 18 km × 18 km). This flexibility enables companies to target geologically promising zones.
- Access to geoscientific data: The National Data Repository (NDR) stores petrophysical, geological and geophysical data for India’s sedimentary basins. Registered users may study this data to evaluate prospects before submitting an Expression of Interest (EoI).
- Two contract types:
- Petroleum Operations Contract (POC): For full exploration and production; the contractor gets an eight‑year exploration period and a 20‑year development and production period.
- Reconnaissance Contract (RC): For preliminary surveys; valid for three years with the option to migrate to a POC, incentivising early work.
- Originator incentives: The firm that initially proposes a block (the “originator”) receives additional points during bid evaluation and can migrate from a reconnaissance contract to a production contract, encouraging first movers.
- Regular bidding cycles: Expressions of interest are collected continuously but converted into bid rounds every six months, creating predictable opportunities for investors.
- Simplified fiscal regime: HELP provides a uniform licence for all hydrocarbon types, low royalty rates (especially offshore), no oil cess on crude oil from HELP blocks and freedom to market gas at market‑determined prices. The government shares revenue based on the contractor’s gross production, reducing the administrative burden.
How the process works
- The investor studies geological and geophysical data from the NDR.
- A block is carved out and an Expression of Interest (EoI) for either a POC or RC is submitted to the Directorate General of Hydrocarbons.
- The government combines accepted EoIs into a formal bid round and issues a Notice Inviting Offers (NIO).
- Companies submit financial and technical bids; evaluation considers work programme commitment, revenue share and originator incentive.
- The selected bidder signs the relevant contract and commences exploration.
Significance
- Encouraging exploration: By letting companies choose blocks anytime, the policy speeds up discovery of oil and gas, which could reduce import dependence.
- Reducing red tape: A single licence and revenue‑sharing model simplify regulatory oversight and align industry incentives with government revenue.
- Attracting investment: Low royalties and marketing freedom make Indian basins more attractive to domestic and foreign explorers.
- Data transparency: Open access to the NDR improves competition and levels the playing field for smaller firms.
Source: TH
