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“NELP (New Exploration Licensing Policy) is no help – is how the oil and exploration companies were terming the existing auction policy…so now we have come out with Hydrocarbon Exploration Licensing Policy (HELP),” Dharmendra Pradhan, Minister of State (Independent Charge) for Petroleum and Natural Gas said, when announcing the Cabinet decision on new uniform licensing policy of the government.
HELP will allow all kinds of hydrocarbons exploration and development from an area, and will also have open acreage policy that allows contractors to choose the areas from the data centre, and then bid. It will be administered by revenue-sharing model as well as give marketing and pricing freedom for the crude oil and natural gas.
The new mechanism for auction of marginal fields set the tone for HELP. Discussions on the hydrocarbon exploration policy had begun in November 2015, two months after the marginal field policy was approved by the Union Cabinet. “Under the new regime, the government will not be concerned with the cost incurred, and will receive a share of the gross revenue from sale of oil, gas etc. This is in tune with the government’s policy of Ease of Doing Business,” an official statement said.
Further, a graded system of royalty rates will also be introduced, under which royalty decreases from shallow water to deepwater and ultra-deepwater fields. “At the same time, royalty for inland areas have been kept intact so that revenues to State governments are not affected. On the lines of NELP, cess and import duty will not be applicable on blocks awarded under the new policy,” the statement added. Deepwater and ultra-deepwater areas discovered under HELP will not have to pay royalty for the first seven years, and thereafter deepwater areas will have to pay 5 per cent royalty while ultra-deepwater areas will have to pay 2 per cent royalty.
In shallow water areas, royalty rates shall be reduced to 7.5 per cent, the official statement said. While the contractor will have pricing and marketing freedom, to safeguard the Centre’s revenue, its share will be calculated on the basis of prevailing international crude oil price or the actual price realised, whichever is higher.
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