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Government announces new licensing policy to boost oil output

The Union Ministry of Petroleum & Natural Gas has announced new Open Acreage Licensing Policy (OALP) for oil and gas exploration.

The new policy will allow bidders to carve out areas where they want to drill. It will help energy hungry India and world’s third-largest oil consumer to attract greater foreign investment to boost output.

Key Facts
  • The objective of OLAP is to increase India’s indigenous oil and gas production by maximising the potential of already discovered hydrocarbon resources in the country.
  • OALP offers single license to explore conventional and unconventional oil and gas resources to propel investment in and provide operational flexibility to the investors.
  • It provides operational flexibility to the investors. It is departure from the current licensing policy of government identifying the oil and gas blocks and then putting them on auction.
  • Under it, Government will conduct auction of oil and gas blocks twice a year, with the first round being held in July 2017.
  • The selection of oil blocks will be based on seismic and well data provided by Directorate-General of Hydrocarbons in National Data Repository which offers total of 160TB data of India’s 26 sedimentary basins
  • The OALP auction will be held under the overhauled exploration licensing policy, allowing pricing and marketing freedom to operators and shifts to a revenue sharing model.
Comment

OALP is part of the strategy to make India a business and investor friendly destination and cut import dependence by 10% and achieve the plan to double  existing oil production from current 80 million metric tons to about 150-155 million metric tons by 2022. In this new model, government will not micromanage, micro monitor with producers rather only share revenue. Thus, it gives an option to a company looking for exploring hydrocarbons to select the exploration areas on its own. The July 2017 auction under this new policy will be India’s first major exploration licensing round since 2010.

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Union Cabinet approves oil storage pact with UAE’s ADNOC

The Union Cabinet has approved signing of the Definitive Agreement on Oil Storage and Management between Indian Strategic Petroleum Reserve Ltd (ISPRL) and UAE’s Abu Dhabi National Oil Company (ADNOC).

Government’s this move aims at boosting India’s energy security by ensuring a strategic storage flow in for crude oil, from a government firm in Abu Dhabi for meeting unexpected future exigencies. 

According to the Agreement
  • ADNOC will fill up 0.81 MMT or 5,860,000 million barrels of crude oil at ISPRL storage facility at Mangalore, Karnataka.
  • Out of the crude stored, some part will be used for commercial purpose of ADNOC, while a major part will be purely for strategic purposes.
  • The investment by ADNOC is a major investment from UAE under the High Level Task Force on Investment (HLTFI). It is also first investment by UAE in India in the energy sector.
Background

India being fastest growing economies and world’s third-biggest oil consumer, is building emergency storage in underground caverns to hold 36.87 million barrels of crude. It is equivalent to about 10 days of its average daily oil demand. This move aims to hedge against energy security risks as it imports most of its oil needs.

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Union Cabinet approves MoU between India and UAE in field of Energy Efficiency Services

The Union Cabinet has approved the Memorandum of Understanding (MoU) between India and United Arab Emirates (UAE) to provide various services in the field of energy management and conservation.

The MoU was signed between the National Productivity Council (NPC), an autonomous body under the Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce and Al Etihad Energy Services UAE.

Key Facts
  • Under the MoU, the NPC will provide the following services: (i) Energy Assessment Services (ii) Training & Certification of Energy Auditors (iii) Demand Side Management.
  • Meanwhile, Al Etihad ES will provide (i) Customer Support with UAE Government and Private owned organizations in the UAE (ii) Local support for Field Auditing Professionals (iii) local support for Training & Certification of Energy Auditors (iv) Support related to Demand Side Management of industries.
  • The MoU will enable NPC avail high value opportunities such as energy building and develop institutional mechanism in area of energy efficiency in Dubai and other GCC member countries.
  • It will provide recognition and exposure to further build NPC’s capacities and competencies in rapidly changing international business scenario.
  • The MoU will be precedent for NPC’s engagements with other International collaboration partners and will enhance its visibility in arena.

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