KOLKATA (miningweekly.com) - India’s apex federal economic decision making body, the Cabinet Committee for Economic Affairs (CCEA), was expected to approve a new policy within the next two months, putting in play an open acreage licensing policy (OALP) and subsequently offering 46 oil and gas blocks up for auction.

The new policy would replace the cost recovery contract model of granting oil and gas blocks under the neew exploration and licensing policy (NELP), with bidding based on revenue sharing contracts under OALP.

Under OALP, exploration and production (E&P) companies would be able to put in bids for blocks round the year instead of the government calling for bids under NELP.

According to an official in Oil and Natural Gas Ministry, the sector regulator, Directorate General for Hydrocarbons (DGH) haa identified 46 blocks for auction under OALP, of which 17 were on-shore, 15 shallow water and 14 deep-water blocks.

There was no information available whether oil and gas blocks surrendered over the past few years by such global E&P majors like ENI, Chevron and BHP Billiton aggregating a total area of 57 000 km2 would be included among the 46 blocks to be put under the hammer.

However, the official on a note of caution said that despite early approval by the CCEA, the exact timing of announcing the auction and calling for bids would have to be decided against the backdrop of a global crash in oil and gas prices and resultant fallout of global majors already announcing major cutbacks on capital expenditure.

To further sweeten the new OALP, the government was not only offering investors round-the-year bidding, but also exploration and production of all types of hydrocarbons—oil, gas, shale gas and coal bed methane under a single license, the official said.

But a section of industry sources said that despite easing of policy contours governing the sector, global and domestic investors’ response would largely depend on Indian gas pricing regime and the government’s reluctance to put in play a market determined pricing regime.

As reported by Mining Weekly Online earlier this month, the Indian government had backtracked in freeing gas prices to market forces on plea that the domestic energy market was not “mature enough and market determined regime would bring in distortions in prices.” In fact the government in September reduced natural gas prices by 15% to 4.24 per million metric tonne despite opposition from E&P companies that this would make fresh investments in exploration and production from new block unviable.