Oil and Gas Sector – HELP, Open Acreage Policy, etc.

Oil Exploration in the Andaman Basin

Why in the News?

The Union Minister for Petroleum has revealed that India is on the brink of a Guyana-like oil discovery in the Andaman Sea

Do you know?

Guyana, now a major oil-producing nation, has seen 47% average real GDP growth since 2022, driven by offshore oil.

 

Oil Exploration in the Andaman Basin

About the Oil Exploration in Andaman Basin:

  • Location & Scale: It lies in the southeastern Bay of Bengal and covers about 2.25 lakh sq. km, making it one of India’s largest underexplored offshore sedimentary basins.
  • Geological Importance: It shares tectonic and structural similarities with nearby hydrocarbon-rich basins in North Sumatra (Indonesia) and Irrawaddy-Margui (Myanmar).
  • Historical Restrictions: The area was long considered a ‘No-Go’ zone due to environmental and strategic reasons, preventing oil exploration until recently.
  • Scientific Breakthrough: In 2020, Oil India Ltd launched the Deep Andaman Offshore Survey, which discovered mud volcanoes and Baratang formations — signs of hydrocarbon activity.
  • Data Entry into National Records: The survey findings were added to the National Data Repository (NDR) in 2023, making crucial geological data available to investors.
  • Rising Strategic Interest: The basin is now seen as vital for India’s energy security due to its deepwater potential and ability to cut down oil imports.
  • Recent Collaborations: Companies like ONGC partnered with TotalEnergies (France) in 2023 to explore deepwater blocks in the basin.

Policy Shift that Enabled Exploration:

  • Introduction of HELP: The Hydrocarbon Exploration and Licensing Policy (HELP) was introduced in 2016, replacing the older NELP system with a more industry-friendly framework.
  • Licensing Reform: HELP provides a single license for all hydrocarbons — oil, gas, shale, and coal bed methane — removing the need for separate permits.
  • Revenue Sharing System: Instead of auditing costs, the government now receives a fixed share of revenue, simplifying financial compliance and reducing disputes.
  • OALP and Investor Flexibility: The Open Acreage Licensing Policy (OALP) allows companies to bid for exploration blocks of their own choosing throughout the year, encouraging customized investment.
  • Use of Geological Data: The National Data Repository (NDR) helps companies make informed decisions using extensive geological and seismic information.
  • Market Freedom: Under HELP, companies have the freedom to price and market their oil and gas, which boosts competitiveness and attracts private players.
  • Royalty Incentives: A graded royalty system reduces rates for deepwater and ultra-deepwater blocks, offsetting high-risk exploration like in the Andaman.
[UPSC 2006] Which one of the following companies is associated with the exploration and commercial production of oil in Barmer Sanchore basin of Rajasthan?

Options: (a) Cairn Energy * (b) Unocal Corporation (c) Reliance Energy Ventures (d) ONGC

 

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