New policy regime - Hydrocarbon Exploration Licensing Policy (HELP)
Q. Which of the following is/are true regarding HELP?
1) The new policy regime for exploration and production of oil and gas is known as Hydrocarbon Exploration Licensing Policy (HELP).
2) A bidder may apply to the Government seeking exploration of any block not already covered by exploration.- Published on 11 Mar 16a. Only 1
b. Only 2
c. Both 1 and 2
d. Neither 1 nor 2
ANSWER: Both 1 and 2
- There will be a uniform licensing system which will cover all hydrocarbons, i.e. oil, gas, coal bed methane etc. under a single license and policy framework.
- Contracts will be based on “biddable revenue sharing”. Bidders will be required to quote revenue share in their bids and this will be a key parameter for selecting the winning bid. They will quote a different share at two levels of revenue called “lower revenue point” and “higher revenue point”. Revenue share for intermediate points will be calculated by linear interpolation. 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.
- An Open Acreage Licensing Policy will be implemented whereby a bidder may apply to the Government seeking exploration of any block not already covered by exploration. This will enable a faster coverage of the available geographical area.
- A concessional royalty regime will be implemented for deep water and ultra-deep water areas. These areas shall not have any royalty for the first seven years, and thereafter shall have a concessional royalty of 5% (in deep water areas) and 2% (in ultra-deep water areas).
- In shallow water areas, the royalty rates shall be reduced from 10% to 7.5%.
- The contractor will have freedom for pricing and marketing of gas produced in the domestic market on arm’s length basis. To safeguard the Government revenue, the Government’s share of profit will be calculated based on the higher of prevailing international crude price or actual price.
- The introduction of the concept of revenue sharing is a major step in the direction of “minimum government maximum governance”, as it will not be necessary for the Government to verify the costs incurred by the contractor.
