Union Cabinet Approved Hydrocarbon Exploration and Licensing Policy

The Union Cabinet, presided by Prime Minister Narendra Modi, on 10 March 2016 approved the Hydrocarbon Exploration and Licensing Policy (HELP).

•    The decision will enhance domestic oil and gas production, bring substantial investment in the sector and generate sizable employment.
•    The policy also targets the enhancement of transparency and reduction of administrative discretion.
•    The HELP will replace the New Exploration Licensing Policy (NELP).
•    Uniform license for exploration and production of all forms of hydrocarbon
•    The uniform licence will enable the contractor to explore conventional as well as unconventional oil and gas resources including CBM, shale gas/oil, tight gas and gas hydrates under a single license.  
•    The concept of Open Acreage Policy will enable Exploration & Production (E&P) companies choose the blocks from the designated area.
•    Present fiscal system of production sharing based on Investment Multiple and cost recovery /production linked payment will be replaced by an easy to administer revenue sharing model.
•    The earlier contracts were based on the concept of profit sharing where profits are shared between Government and the contractor after recovery of cost.
•    Under the profit sharing methodology, it became necessary for the Government to scrutinize cost details of private participants and this led to many delays and disputes.
•    Under the new regime, the Government will not be concerned with the cost incurred and will receive a share of the gross revenue from the sale of oil, gas etc. This is in tune with Government’s policy of Ease of Doing Business.
•    Cess and import duty will not be applicable on blocks awarded under the new policy.  
•    The policy also provides for marketing freedom for crude oil and natural gas produced from these blocks.  
•    This is in tune with Government’s policy of Minimum Government –Maximum Governance.
•    As compared to NELP royalty rates, HELP provides lower royalty rates for offshore areas to encourage exploration and production.
•    At the same time, royalty rate for onland areas have been kept intact so that revenues to the state governments are not affected.