&w=3840&q=100)
India sweetens oil block bids with lease reform, arbitration freedom
Expanded definitions, arbitration rights and lease flexibility mark major policy shift as government tries to revive interest in nearly exhausted oil exploration blocks
Subhomoy Bhattacharjee New Delhi
Listen to This Article
From the nine iterations of the oil acreage licensing policy (OALP), the major change in the tenth version, due out in August this year, will be twofold. The first of those is the expanded definition of mineral oils to include shale oil, shale gas and coal-bed methane.
The other one is the freedom to pursue international arbitration in the event of disputes, as well as offering a longer lease period for the fields the companies win.
Combined with the removal of windfall tax on domestically produced crude that was in effect since July 2022, prospective bidders now have a realistic
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
7 days ago
- Time of India
Foreign oil partners to get first right of refusal in Indian exploration projects: Puri
New Delhi: Foreign oil and gas companies entering technical partnerships with Indian firms will be granted the right of first refusal (ROFR) in the event of hydrocarbon discoveries, Petroleum and Natural Gas Minister Hardeep Singh Puri said on Friday. The minister cited state-run ONGC's recent collaboration with BP for the Mumbai High offshore field and Oil India Ltd's agreement with Brazil's Petrobras in the Andaman Sea basin as examples where such provisions are in place. However, no clarification was provided on the exact contractual terms offered to BP and Petrobras. The ROFR mechanism gives the foreign partner the option to match any offer received by the Indian asset owner from a third party before sale or transfer. Addressing the CII Annual Business Summit 2025, Puri said foreign firms may prefer this model over competitive bidding as it reduces financial exposure. 'It's better that they come in as technical partners, for which they will be paid, and when you strike energy, they'll have the right of first refusal,' he said. On global crude prices, Puri said they are likely to stay close to USD 65 per barrel due to sufficient supply in the market. 'There are enough supplies in the market. I see global prices, and here I am, very careful, to be in the range of USD 65 per barrel. My sense is that prices will hold,' he said. Asked about possible fuel price cuts, the minister said, 'If prices remain like this, then going forward, these are things which you can legitimately expect.' Puri informed that over 1 million square kilometres of sedimentary basins that were previously marked as 'no-go' zones have been opened for exploration. This has led to 37 per cent of the bids under the Open Acreage Licensing Policy (OALP) coming from these newly available areas. Speaking on domestic oil production and refining, he said India's refining capacity, which currently stands at 260 million tonnes per annum (MMTPA), is projected to rise to 309.5 MMTPA by 2028. He said India is shifting from teapot refineries to larger refining hubs. On India's clean energy transition , the minister highlighted rapid progress in ethanol blending. He said the country had already achieved 20 per cent ethanol blending in petrol by 2025, up from 1.4 per cent in 2014, ahead of its 2026 target. Puri reiterated the government's target of bringing green hydrogen production costs down to USD 1 per kg within a decade. He also underlined the potential of large-scale Sustainable Aviation Fuel (SAF) production in countries including India, Brazil, the United States, and Canada. The minister said India imported 5.6 million barrels of crude oil per day in 2024, spending USD 139 billion. To reduce dependence, the country is exploring domestic resources and diversifying import sources from 27 to 40 countries, including Brazil, Guyana, Suriname, Canada and Argentina. India's oil marketing companies reported profits of ₹1.29 lakh crore in the last financial year, and the figure could match previous highs if ₹40,000 crore in pending dues are recovered, Puri said. The minister said that 22,000 km of gas pipeline has been laid as of 2024, with a target of expanding to 33,000 km by 2030. He said domestic gas availability has improved and global prices have stabilised, which will help in boosting industrial and residential consumption. On Compressed Biogas (CBG), Puri said the government has set a target of setting up 5,000 plants. He added that the production of Fermented Organic Manure (FOM) as a by-product remains a key revenue stream for producers. He said land availability and pricing mechanisms will be key to the pace of implementation. Regarding the Ujjwala Yojana, launched in 2016, the minister said there are around 10.3 crore beneficiaries, and the country has over 33 crore LPG connections. Rajiv Memani, President Designate of CII, said, 'Today, India imports over 85 per cent of its crude oil and a significant share of natural gas. Some projections suggest it may reach 90 per cent by 2030. India also imports 50–55 per cent of natural gas. This reliance underscores the urgency to diversify our energy mix, enhance domestic production, and accelerate the adoption of alternative fuels.' Puri also pointed to the growth of energy startups, breakthrough discoveries, and ongoing innovation as indicators of progress. He emphasised the need for collaboration between auto manufacturers and industry leaders to drive clean energy initiatives.
Mint
30-05-2025
- Mint
Oil prices likely to stay around $65/bbl, says petroleum minister Puri
New Delhi: Minister for petroleum and natural gas Hardeep Singh Puri on Friday said that crude oil prices are likely to stay near $65 per barrel due to the ample supply of oil in the global market. Speaking at the CII Annual Business Summit 2025, the minister said that high production is weighing on the oil market. "There are enough supplies in the market. I see global prices, and here I am, very careful, to be in the range of $65 per barrel. My sense is that prices will hold. Supplies becoming available, the prices will be close to $65 a barrel,' he said. He noted that although there have been disruptions due to geopolitical tensions, the prices have not surged as the market is aware that there are adequate supplies. Puri also said that economies with strategic reserves would want to fill them up when the price is low. Mint earlier reported that the government is looking at filling the strategic reserves amid low global prices. The July contract of Brent on the Intercontinental Exchange was $63.96 per barrel, 0.3% lower than its previous close, at the time of going to press. On the likely cut in retail prices of petrol and diesel, the minister told the media, 'If prices remain like this, then going forward, these are things which you can legitimately expect.' Addressing the event, the minister highlighted steps taken by the government to boost domestic oil and gas production. He said that over 1 million square kilometres of sedimentary basins, previously marked as 'no-go' zones, have now been opened for exploration, following which over 37% of bids under the Open Acreage Licensing Policy (OALP) have come from these newly opened areas. Stating that India will be one of the refining hubs, he said the trend was towards the emergence of refining hubs instead of teapot refineries. India's refining capacity is 260 million metric tonnes per annum (mmtpa), which is expected to reach 309.5 mmtpa by 2028, he said. On the significance of the recently passed Oilfields (Regulation and Development) Amendment Act, 2025, Puri emphasised that India has made it easier to do business in exploration and production activities by introducing a single permit system. Despite importing 5.6 million barrels of crude oil per day and spending $139 billion last year on imports, domestic reforms are expected to reduce this dependency. The minister said the government is encouraging domestic exploration while diversifying import sources to 40 from 27 countries. On the clean energy front, he said that there is huge potential for the production of Sustainable Aviation Fuel (SAF) in large quantities in countries like India, Brazil, the US and Canada.
Mint
27-05-2025
- Mint
Energy security: India needn't be staring at a $1 trillion import bill
As India races towards economic superpower status, a glaring vulnerability threatens to undermine our progress: our dependence on imported oil and gas. According to the Petroleum Planning & Analysis Cell (PPAC), India's crude oil import dependency has reached 87-88%, with projections suggesting it may exceed 90% by 2030. This trajectory could result in a staggering $1 trillion energy import bill over the next five years. The decline in domestic production makes for disheartening reading. Our crude oil output has fallen from over 36.9 million tonnes in 2015-16 to just 29.7 million tonnes in 2023-24, even as our consumption stays on a relentless upward trajectory. Natural gas presents a slightly better picture, with import dependency at 50-55%, but rapidly rising demand threatens to widen this gap as well. Also Read: Counter-intuitive: Why Opec wants lower oil prices On paper, India holds significant hydrocarbon potential: around 210–215 billion barrels of oil and oil-equivalent gas across 3.14 million sq km of sedimentary basins. Yet, only half this area has been explored. Without aggressive efforts to explore and develop these reserves, this potential will remain untapped. To its credit, India's government has implemented several policy initiatives to stimulate upstream activity. The Hydrocarbon Exploration and Licensing Policy (HELP), introduced in 2016, replaced the previous New Exploration Licensing Policy with a revenue-sharing contract (RSC) model, uniform licensing for all hydrocarbons and promised marketing and pricing freedom for new gas production. The Open Acreage Licensing Policy (OALP) allowed companies to select exploration blocks year-round, rather than waiting for formal bid rounds. While more than 150 blocks have been offered across nine OALP rounds since 2018, the results have been modest. Participation has declined and international oil companies—crucial for capital and technology—remain largely absent. The recent OALP-IX round in 2024 saw only eight blocks awarded, primarily to national oil companies. Also Read: Crude comfort: Let's not lose sleep over India's rising oil dependency A core issue lies in the shift from production sharing contracts (PSCs) to the RSC model. This structure places greater upfront risk on explorers—particularly problematic in under-explored regions where geological uncertainty is high. Countries like Mexico, Brazil and Colombia offer counter examples. Mexico retained PSCs for high-risk areas following its 2013 reforms, attracting over $40 billion in investment. Brazil's PSCs for its pre-salt reserves brought in significant capital and innovation. Even Colombia, with less prospective geology, succeeded by aligning fiscal terms with investor expectations. In India, despite policy improvements on paper, practical challenges persist. Administrative delays, unclear fiscal terms and perceptions of high risk deter global participation. The exploration landscape remains dominated by national firms like ONGC and Oil India Ltd. While their efforts are commendable, a more diverse ecosystem—including international majors and specialized independents—is essential to scale exploration meaningfully. Compounding this is the global energy transition. As decarbonization gains traction, traditional oil and gas investments face increasing scrutiny. Yet, in the context of India's economic growth and our long runway to net-zero by 2070, hydrocarbons will remain critical to India's energy mix for decades. Balancing immediate energy security with long-term sustainability requires strategic intervention for upstream exploration to attract capital. Also Read: Global oil market dynamics are shifting in favour of India's energy plans To address these challenges, India must adopt a multi-pronged and strategic approach. A key step is to revisit the fiscal regime and consider re-introducing PSCs, especially for frontier and high-risk basins where geological uncertainty is high. This model better balances risk and reward, as seen in countries like Mexico and Indonesia, which saw investment rebounds after adopting or enhancing PSC frameworks. Administrative complexities related to cost recovery—often cited as a drawback of PSCs—can be managed through appropriate delegation to tax authorities under the ministry of finance. Also, the National Seismic Programme must be accelerated to map India's sedimentary basins comprehensively. Employing advanced technologies to reduce geological risk will enhance investor confidence and guide better targeted exploration efforts. In tandem, the government should offer more attractive fiscal incentives for technically challenging or less-proven areas. These could include reduced royalty rates, extended exploration timelines, tax holidays and cost recovery allowances. The UK and Norway offer instructive examples of how tailored financial structures can sustain exploration even in mature or complex basins. Administrative streamlining is also essential. Simplifying approval processes and ensuring timely, transparent decision-making would go a long way in attracting investment. A single-window clearance system could help eliminate bottlenecks that frustrate developers and delay projects. To support risk-taking in exploration, particularly by smaller firms and new entrants, the creation of specialized exploration funds with built-in risk-sharing mechanisms could play a catalytic role. These funds could help diversify participation and reduce capital constraints for technically capable but financially constrained players. Additionally, strengthening the capabilities of national oil companies through strategic international partnerships would help accelerate technology adoption and improve operational efficiency. Institutions like the Directorate General of Hydrocarbons should be empowered with greater independence and resources, allowing them to function more effectively as regulators and facilitators of sectoral growth. Also Read: Rely on modern geothermal energy to power our AI ambitions The recent Oilfields Regulation and Development Amendment Act of 2024 modernizes the outdated 1948 law, addressing several industry pain points. It introduces faster dispute resolution, clearer contractual definitions and incentives for enhanced recovery. Importantly, it recognizes new exploration technologies. If the 2024 amendment is effectively implemented, it could reduce contractual uncertainty and unlock stalled projects. However, as global examples such as Kazakhstan show, legislative reforms must be accompanied by consistent administrative execution. Rules, notifications and clarity in application will determine the amendment's impact. The $1 trillion that India may spend on energy imports by 2030 is not just a financial burden, it is a lost opportunity to generate domestic jobs, spur innovation and achieve energy sovereignty. The roadmap is clear; the urgency now lies in execution. This is India's trillion dollar question. Our response will shape the nation's energy future and economic destiny for generations to come. The authors are, respectively, vice president of Pune International Centre; and managing director with Boston Consulting Group and founder member of Pune International Centre.
