India attracted $36 bn investment, 177 discoveries in pre-2014 oil, gas blocks: Oil Min Report

New Delhi: India attracted over $36 billion investment from nine NELP bid rounds held before 2014, and has so far yielded 177 oil and gas discoveries, according to a report commissioned by the Petroleum Ministry.

Under the New Exploration Licensing Policy (NELP), blocks were awarded to bidders promising maximum exploration, allowing them to recover investments from oil and gas they discover and produce before sharing profits with the government.

In 2016, this was replaced by a revenue-sharing model, where blocks go to firms offering the highest share of output to the government.

The 254 blocks awarded in nine bid rounds of NELP between 1999 and 2010 attracted $17.6 billion investment in exploration that led to 67 oil discoveries and 110 gas finds, and another $18.64 billion in development of some of those discoveries.

The 144 blocks awarded in eight big rounds of Open Acreage Licensing Policy (OALP) from 2018 to 2022 saw $1.37 billion investment in exploration, leading to 6 oil discoveries and 4 gas finds, the report said.

Reliance Industries and its partner BP Plc's eastern offshore KG-D6 block, which produces a third of all natural gas produced in the country, as well as the showpiece KG-DWN-98/2 (KG-D5) block of state-owned Oil and Natural Gas Corporation (ONGC) were awarded in NELP rounds.

The interim report of the Joint Working Group constituted by the ministry on issues related to Ease of Doing Business in the Indian Upstream Sector said NELP helped increase area under exploration and attract private and foreign investment into India's exploration and production (E&P) sector.

"Major international companies such as British Gas, Cairn Energy, Eni, BHP Billiton, and BP participated in the NELP bidding rounds, bringing advanced exploration technologies and capital into India's upstream industry." Despite its successes, NELP rounds had its challenges, it said. "One of the major issues was the delays in obtaining clearances, including environmental and regulatory approvals, which often resulted in significant project delays.

"Additionally, disputes over cost recovery under the PSC regime led to disagreements between contractors and the government, with both parties interpreting the contracts differently." Recognizing the need to improve the Ease of Doing Business in the sector, the government introduced a series of policy reforms and incentives aimed at addressing these inefficiencies.

In 2016, the Hydrocarbon Exploration and Licensing Policy (HELP) was introduced to address the challenges faced under NELP and create a more investor-oriented regime. HELP replaced the production sharing contract (PSC) model with a Revenue Sharing Contract (RSC) model, simplified the licensing framework, and introduced greater flexibility in exploration and production activities.

"This marked a transformational shift in India's E&P regime, with a stronger focus on reducing operational complexities, increasing transparency, and providing greater autonomy to operators," the report said, adding RSCs reflected the government's vision to create a more transparent, efficient, and competitive environment in India's oil and gas sector, aligning with global best practices.

"RSCs represent a critical evolution in the contractual framework and are designed to address some of the limitations of the previous PSC model such as intricate cost recovery process, leading to delays, bureaucratic bottlenecks, and disputes over recoverable expenses." Under RSCs, the contractor and government share revenue from the sale of hydrocarbons at pre-agreed percentages, regardless of the costs incurred during exploration and production.

The RSC regime was implemented in a series of eight bidding rounds, starting with OALP-I round in 2018 and concluding with OALP-VIII in 2022, the report said.

Last week, the government signed contracts for the 28 blocks offered in OALP-IX round and a 10th round is under offer currently.

Alongside OALP, the government also introduced the Discovered Small Field (DSF) policy in 2015 which aimed at monetizing small and marginal fields that had been discovered by the national oil companies but were not developed due to their perceived lack of economic viability under previous regimes.

The report said 85 contract areas, holding multiple discoveries, were awarded in three bid rounds since 2016, drawing $69 million investment in exploration and another $192 million in development of the finds. Of the 85 areas, 51 are active presently.

Last week, contracts for two areas offered in a Special DSF Bid Round were signed and a fourth round was offered.

The report said only 29 blocks out of the 254 blocks bid round in NELP rounds, are active presently. The remaining being relinquished for want of a discovery or the finds being too small to develop. Similarly, of the 144 blocks awarded in eight bid rounds of OALP, 128 are active presently.

The JWG, headed by Praveen M. Khanooja, Additional Secretary, Ministry of Petroleum and Natural Gas, made recommendations for resolutions of issues ranging from delivery points of hydrocarbon discovered, grant of extra days for delays in government related approvals, reduction in contract area and work programme due to denial or delay in statutory clearances for exploratory activities, field development plan approvals, grant of extension of exploration/development period and transfer of participating interest in blocks.