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First auction under Modi government’s new oil policy today

Vijay Thakur | New Delhi |

The new liberal policy of Modi Government for auctioning of oil blocks would see its first auction of 55 oil blocks on Thursday under HELP (Hydrocarbon Exploration and Licensing Policy) which allows companies to carve out blocks of their choice to some extent.

The first auction under HELP would see the auctioning of 55 exploration blocks, which has a total area of 59,282 square kilometre, in the first bid round, in which government had invited expression of interest (EOI)  in July last year from oil companies for exploration and production of oil and gas from prospective oil and gas fields.

Oil industry experts, however, feel that this was not the right time to seek auction of oil fields as the crude oil is hovering around USD 60 a barrel. “It would not attract as good response as it would have in 2011-12 when crude oil was hovering at USD 118 a barrel,” sources in the Ministry said.

HELP, introduced in 2016, has made provisions for contractors to produce both conventional fuels like oil and gas as well as unconventional fuels like shale oil/gas and gas hydrates under the same licence, unlike the earlier NELP (New Exploration Licensing Policy), which was introduced in 1997-98. After coming to power, Modi government had set an aspirational target to cut oil import dependence by 10 percentage points to 67% by 2022 from 2015 levels.

It guarantees marketing and pricing freedom and moves away from production sharing model of previous rounds to a revenue sharing model where companies offering maximum share of oil and gas to government are awarded the block.