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Hydrocarbon Exploration and Licensing Policy (HELP)

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<p>Hydrocarbon Exploration and  Licensing Policy (HELP) is a policy adopted by Government of India on  10.03.2016 indicating the new contractual and fiscal model for award of  hydrocarbon acreages towards exploration and production (E&amp;P). HELP is  applicable for all future contracts to be awarded. </p>
 
<p>Hydrocarbon Exploration and  Licensing Policy (HELP) is a policy adopted by Government of India on  10.03.2016 indicating the new contractual and fiscal model for award of  hydrocarbon acreages towards exploration and production (E&amp;P). HELP is  applicable for all future contracts to be awarded. </p>
<p>HELP replaces the present policy regime  for exploration and production of oil and gas, known as New Exploration  Licensing Policy (NELP), which has been in existence for 18 years.</p>
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<p>HELP replaces the present policy regime  for exploration and production of oil and gas, known as [http://www.arthapedia.in/index.php?title=New_Exploration_and_Licensing_Policy_(NELP) New Exploration  Licensing Policy (NELP)], which has been in existence for 18 years.</p>
 
<p><strong>&nbsp;</strong></p>
 
<p><strong>&nbsp;</strong></p>
 
<p><strong>Features of HELP</strong><br>
 
<p><strong>Features of HELP</strong><br>
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   <li><strong>Uniform License:</strong> It  provides for a uniform licensing system to cover&nbsp;all hydrocarbons such as  oil, gas, coal bed methane etc. under a single licensing framework, instead of  the present system of issuing separate licenses for each kind of hydrocarbons.</li>
 
   <li><strong>Uniform License:</strong> It  provides for a uniform licensing system to cover&nbsp;all hydrocarbons such as  oil, gas, coal bed methane etc. under a single licensing framework, instead of  the present system of issuing separate licenses for each kind of hydrocarbons.</li>
 
   <li><strong>[http://www.arthapedia.in/index.php?title=Open_Acreage_License_Policy_(OALP) Open Acreages]</strong><strong>:</strong> It gives the option to a hydrocarbon company to select the  exploration blocks throughout the year without waiting for the formal bid round  from the Government. </li>
 
   <li><strong>[http://www.arthapedia.in/index.php?title=Open_Acreage_License_Policy_(OALP) Open Acreages]</strong><strong>:</strong> It gives the option to a hydrocarbon company to select the  exploration blocks throughout the year without waiting for the formal bid round  from the Government. </li>
   <li><strong>[http://www.arthapedia.in/index.php?title=Revenue_Sharing_Contract_(RSC) Revenue Sharing ]</strong><strong>Model:</strong>  Present fiscal system of [http://www.arthapedia.in/index.php?title=Production_Sharing_Contract_(PSC) production sharing contract (PSC)] is replaced&nbsp;by an easy to  administer&nbsp;&ldquo;revenue sharing model&rdquo;.&nbsp;The earlier contracts were based  on the concept of profit sharing where profits are shared between Government  and the contractor after recovery of cost. Under the profit sharing  methodology, it became necessary for the Government to scrutinize cost details  of private participants and this led to many delays and disputes. Under the new  regime, the Government will not be concerned with the cost incurred and will  receive a share of the gross revenue from the sale of oil, gas etc. Bidders will be required to quote revenue share in their bids and  this will be a key parameter for selecting the winning bid.&nbsp; They will  quote a different share at two levels of revenue called &ldquo;lower revenue point&rdquo;  and &ldquo;higher revenue point&rdquo;.&nbsp; Revenue share for intermediate points will be  calculated by linear interpolation.&nbsp; The bidder giving the highest net  present value of revenue share to the Government, as per transparent  methodology, will get the maximum marks under this parameter.</li>
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   <li><strong>[http://www.arthapedia.in/index.php?title=Revenue_Sharing_Contract_(RSC) Revenue Sharing]</strong> <strong>Model:</strong>  Present fiscal system of [http://www.arthapedia.in/index.php?title=Production_Sharing_Contract_(PSC) production sharing contract (PSC)] is replaced&nbsp;by an easy to  administer&nbsp;&ldquo;revenue sharing model&rdquo;.&nbsp;The earlier contracts were based  on the concept of profit sharing where profits are shared between Government  and the contractor after recovery of cost. Under the profit sharing  methodology, it became necessary for the Government to scrutinize cost details  of private participants and this led to many delays and disputes. Under the new  regime, the Government will not be concerned with the cost incurred and will  receive a share of the gross revenue from the sale of oil, gas etc. Bidders will be required to quote revenue share in their bids and  this will be a key parameter for selecting the winning bid.&nbsp; They will  quote a different share at two levels of revenue called &ldquo;lower revenue point&rdquo;  and &ldquo;higher revenue point&rdquo;.&nbsp; Revenue share for intermediate points will be  calculated by linear interpolation.&nbsp; The bidder giving the highest net  present value of revenue share to the Government, as per transparent  methodology, will get the maximum marks under this parameter.</li>
 
   <li><strong>Marketing and Pricing  Freedom</strong> has been granted, subject  to a ceiling price limit, for new gas production from  Deepwater, Ultra Deepwater and High Pressure-High Temperature Areas. The policy  provides marketing and pricing freedom to the gas production from existing  discoveries which are yet to commence commercial production as on 1.1.2016 as  well as for future discoveries<sup class="reference">[[#ref1|[1]]]</sup>. Considering the  imperfections in gas markets in India, and to protect the interests of the  consuming sector, a ceiling based on the landed cost of the alternate fuels has  been imposed. The ceiling price shall be the, lowest of the  </li>
 
   <li><strong>Marketing and Pricing  Freedom</strong> has been granted, subject  to a ceiling price limit, for new gas production from  Deepwater, Ultra Deepwater and High Pressure-High Temperature Areas. The policy  provides marketing and pricing freedom to the gas production from existing  discoveries which are yet to commence commercial production as on 1.1.2016 as  well as for future discoveries<sup class="reference">[[#ref1|[1]]]</sup>. Considering the  imperfections in gas markets in India, and to protect the interests of the  consuming sector, a ceiling based on the landed cost of the alternate fuels has  been imposed. The ceiling price shall be the, lowest of the  </li>
   <li>Fuel oil import landed price  </li>
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   <ul><li>Fuel oil import landed price  </li>
 
   <li>Weighted average import landed  price of substitute fuels (0.3 x price of imported coal + 0.4 x price of  imported fuel oil + 0.3 x price of imported naphtha) and  </li>
 
   <li>Weighted average import landed  price of substitute fuels (0.3 x price of imported coal + 0.4 x price of  imported fuel oil + 0.3 x price of imported naphtha) and  </li>
   <li>LNG import landed price. </li>
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   <li>LNG import landed price. </li><ul>
 
</ul>
 
</ul>
 
<p>&nbsp;</p>
 
<p>&nbsp;</p>
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<p><strong>&nbsp;</strong></p>
 
<p><strong>&nbsp;</strong></p>
 
<p><strong>Background</strong><br>
 
<p><strong>Background</strong><br>
  Till the adoption of Liberalisation policy  in 1991-92, petroleum exploration and production (E&amp;P) activities were  carried out in India only by public sector oil companies  viz,  Oil and Natural Gas Corporation Limited (ONGC) and Oil India Limited (OIL). The  New Exploration Licensing Policy (NELP) for exploration &amp; production of oil  &amp; natural gas (but excluding Coal Bed Methane), and the Coal Bed Methane  (CBM) Policy were formulated during 1997-98 by the Government of India, with [http://www.dghindia.org/ Directorate  General of Hydrocarbons] (DGH) as the nodal agency, to provide a  level playing field for both the public and private sector companies in  exploration and production (E&amp;P) of hydrocarbons. The activities in E&amp;P  sector have been significantly boosted by this policy and it has opened up  E&amp;P sector to private and foreign investment with 100% Foreign Direct  Investment (FDI), bringing in a healthy competition between public sector oil  companies and private sector or foreign companies. </p>
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Till the adoption of Liberalisation policy  in 1991-92, petroleum exploration and production (E&amp;P) activities were  carried out in India only by public sector oil companies  viz,  Oil and Natural Gas Corporation Limited (ONGC) and Oil India Limited (OIL). The  New Exploration Licensing Policy (NELP) for exploration &amp; production of oil  &amp; natural gas (but excluding Coal Bed Methane), and the Coal Bed Methane  (CBM) Policy were formulated during 1997-98 by the Government of India, with [http://www.dghindia.org/ Directorate  General of Hydrocarbons] (DGH) as the nodal agency, to provide a  level playing field for both the public and private sector companies in  exploration and production (E&amp;P) of hydrocarbons. The activities in E&amp;P  sector have been significantly boosted by this policy and it has opened up  E&amp;P sector to private and foreign investment with 100% Foreign Direct  Investment (FDI), bringing in a healthy competition between public sector oil  companies and private sector or foreign companies. </p>
 
<p>Under NELP, which became effective in  February 1999 (with the first production sharing contract (PSC) getting signed  in 2000), acreages are offered to the participating companies through a process  of open international competitive bidding, in a transparent manner with  attractive terms &amp; conditions. The first round of offer of blocks was  launched in 1999 and most of the ninth round awards were concluded in 2012. </p>
 
<p>Under NELP, which became effective in  February 1999 (with the first production sharing contract (PSC) getting signed  in 2000), acreages are offered to the participating companies through a process  of open international competitive bidding, in a transparent manner with  attractive terms &amp; conditions. The first round of offer of blocks was  launched in 1999 and most of the ninth round awards were concluded in 2012. </p>
 
<p>The salient features of NELP are as under:</p>
 
<p>The salient features of NELP are as under:</p>
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<p><strong>Source: </strong>[http://petroleum.nic.in/docs/imppolicy.pdf <strong>Ministry  of Petroleum and Natural Gas</strong>]<strong>, </strong>accessed on 11 March 2016<strong></strong><br>
 
<p><strong>Source: </strong>[http://petroleum.nic.in/docs/imppolicy.pdf <strong>Ministry  of Petroleum and Natural Gas</strong>]<strong>, </strong>accessed on 11 March 2016<strong></strong><br>
 
   <em>Notes: Here, CBM stands for Coal Bed Methane and PEL and  ML stands for Petroleum Exploration Licence (PEL) and Petroleum Mining Lease  (PML): PEL is granted for a period of 7 years in onland /shallow water areas  and for 8 years in deepwater and frontier areas for exploration activities as  per PSC provisions under NELP. (This has been increased to 8 and 10 years  respectively in the new fiscal regime adopted on 10.03.2016 – </em>[http://pib.nic.in/newsite/PrintRelease.aspx?relid=137638 <em>HELP or Hydrocarbon exploration and  Licensing Policy</em>]<em>)  Petroleum Mining Lease (PML) is normally awarded for 20 years for producing  Hydrocarbons as per The Oilfields Regulation &amp; Development Act, 1948 and  Petroleum &amp;Natural Gas Rules, 1959. PEL/PML for offshore exploration &amp;  production operations is granted by the Union Government. In case of onland  blocks, PEL/PML is granted by the concerned State Government on the basis of  recommendation made by the Union Government for the awarded blocks. <strong></strong></em></p>
 
   <em>Notes: Here, CBM stands for Coal Bed Methane and PEL and  ML stands for Petroleum Exploration Licence (PEL) and Petroleum Mining Lease  (PML): PEL is granted for a period of 7 years in onland /shallow water areas  and for 8 years in deepwater and frontier areas for exploration activities as  per PSC provisions under NELP. (This has been increased to 8 and 10 years  respectively in the new fiscal regime adopted on 10.03.2016 – </em>[http://pib.nic.in/newsite/PrintRelease.aspx?relid=137638 <em>HELP or Hydrocarbon exploration and  Licensing Policy</em>]<em>)  Petroleum Mining Lease (PML) is normally awarded for 20 years for producing  Hydrocarbons as per The Oilfields Regulation &amp; Development Act, 1948 and  Petroleum &amp;Natural Gas Rules, 1959. PEL/PML for offshore exploration &amp;  production operations is granted by the Union Government. In case of onland  blocks, PEL/PML is granted by the concerned State Government on the basis of  recommendation made by the Union Government for the awarded blocks. <strong></strong></em></p>
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<p>&nbsp;</p>
 
<p><strong>A comparison of both the policies – HELP and NELP is  given below: </strong></p>
 
<p><strong>A comparison of both the policies – HELP and NELP is  given below: </strong></p>
 
<table border="1" cellspacing="0" cellpadding="0" width="80%">
 
<table border="1" cellspacing="0" cellpadding="0" width="80%">
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   <tr>
 
   <tr>
 
     <td valign="top"><strong>Exploration    Period </strong><strong> </strong></td>
 
     <td valign="top"><strong>Exploration    Period </strong><strong> </strong></td>
    <td valign="top">Onland and Shallow Water- 7 years <br>
 
      Deepwater- 8 years </td>
 
 
     <td valign="top">Onland and Shallow Water- 8 years <br>
 
     <td valign="top">Onland and Shallow Water- 8 years <br>
       Deepwater &amp; Ultra-deepwater - 10 years </td>
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      Deepwater- 10 years </td>
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    <td valign="top">Onland and Shallow Water- 7 years <br>
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       Deepwater &amp; Ultra-deepwater - 8 years </td>
 
   </tr>
 
   </tr>
 
   <tr>
 
   <tr>
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*[http://www.arthapedia.in/index.php?title=Open_Acreage_License_Policy_(OALP) Open Acreage License Policy (OALP)]
 
*[http://www.arthapedia.in/index.php?title=Open_Acreage_License_Policy_(OALP) Open Acreage License Policy (OALP)]
 
*[http://www.arthapedia.in/index.php?title=Production_Sharing_Contract_(PSC) Production Sharing Contract (PSC)]
 
*[http://www.arthapedia.in/index.php?title=Production_Sharing_Contract_(PSC) Production Sharing Contract (PSC)]
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*[http://www.arthapedia.in/index.php?title=New_Exploration_and_Licensing_Policy_(NELP) New Exploration Licensing Policy (NELP)]
 
    
 
    
  

Latest revision as of 17:29, 18 March 2016

Hydrocarbon Exploration and Licensing Policy (HELP) is a policy adopted by Government of India on 10.03.2016 indicating the new contractual and fiscal model for award of hydrocarbon acreages towards exploration and production (E&P). HELP is applicable for all future contracts to be awarded.

HELP replaces the present policy regime for exploration and production of oil and gas, known as New Exploration Licensing Policy (NELP), which has been in existence for 18 years.

 

Features of HELP
Four main aspects of HELP are:

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