Hydrocarbon Exploration and Licensing Policy (HELP) and Open Acreage Licensing Policy (OALP)

The Hydrocarbon Exploration and Licensing Policy (HELP) is the set of rules under which the Government of India gives companies the right to search for and produce oil and gas. It was approved by the Union Cabinet on 10 March 2016. Its most important tool is the Open Acreage Licensing Policy (OALP), under which companies can pick the areas they want to explore, instead of waiting for the government to choose areas for them. HELP also changed how the government earns money from oil and gas: from sharing "profit" to sharing "revenue".

Why does it exist?

Oil and gas under the ground or sea belong to the government. Private and public companies need a licence to search for them and pull them out. India imports nearly 89% of the crude oil it uses, so it badly needs more domestic production. The older system had slow approvals, many disputes over costs, and separate licences for each type of hydrocarbon. HELP was designed to make exploration simpler, faster and more attractive to investors.

Where did it come from?

The licensing system has passed through three stages:

• Nomination era (before 1999): The government simply handed exploration areas to its own companies, ONGC (Oil and Natural Gas Corporation) and OIL (Oil India Limited).
• NELP era (1999 to 2016): The New Exploration Licensing Policy was announced in 1997 and came into effect in 1999. For the first time, private and foreign companies could bid for blocks, competing with ONGC and OIL. Over nine rounds, 360 blocks were offered and contracts were signed for 254. NELP used Production Sharing Contracts (PSCs). A separate Coal Bed Methane (CBM) policy covered gas from coal seams.
• HELP era (from 2016): HELP replaced both NELP and the CBM policy. The first OALP bid round led to 55 blocks being awarded in October 2018.

What was wrong with the old Production Sharing Contract?

Under a PSC, the company first got back all its costs from the oil and gas it produced. Only then was the remaining "profit petroleum" shared with the government. The share depended on how much the company had spent. This created a bad incentive: a company that spent more could recover more and pay the government less.

The government also had to check every cost, which led to long disputes. The Comptroller and Auditor General (CAG) raised such concerns about the KG-D6 block, where the planned capital cost rose from about $2.4 billion to $8.5 billion. In 2012, the Rangarajan Committee recommended moving away from cost recovery to a revenue-sharing model.

How does HELP work?

It has four main features:

1. One licence for all hydrocarbons: A single licence covers conventional oil and gas and unconventional types such as shale oil and gas, coal bed methane, tight gas and gas hydrates. Earlier, a company that found shale gas in its oil block needed a fresh licence.
2. Revenue sharing: Companies bid by offering the government a share of their gross revenue (total sales money) from the very start of production. The government no longer needs to audit costs. It only checks how much was produced and sold.
3. Marketing and pricing freedom: Companies can sell the crude and gas they produce at market prices, through a transparent process.
4. Open acreage (OALP): Explained below.

How does OALP work?

Think of it like a restaurant menu versus a fixed thali. Under NELP, the government offered a fixed list of blocks in each round (a fixed thali). Under OALP, a company can study the geological data, choose any area it likes, and submit an Expression of Interest (EoI) at any time (ordering from a menu).

The government collects these chosen areas and puts them up for open bidding in regular rounds. Any company, including the one that proposed the block, can bid. The data needed to choose blocks is kept in the National Data Repository (NDR), launched on 28 July 2017 and hosted by the Directorate General of Hydrocarbons (DGH) at Noida.

Key facts and progress

• After seven OALP rounds, 134 blocks covering 2,07,691 sq km had been awarded across 19 sedimentary basins.
• OALP Round IX: 28 blocks over more than 1.36 lakh sq km were awarded.
• OALP Round X, launched in February 2025, offered 25 blocks of about 1.9 lakh sq km across 13 basins, the largest acreage ever in a single round. Most of its blocks are in deep and ultra-deep waters.
• Discovered Small Field (DSF) Policy (2015): A separate policy that auctions small discoveries already made by ONGC and OIL but never developed. It also uses revenue sharing.
• 2023 reforms: For blocks in less-explored basins (Category II and III), the government lowered royalty rates, set zero revenue share until a "windfall gain" (unusually high profit), and removed the drilling commitment in the first phase.
• Oilfields (Regulation and Development) Amendment Act, 2025: Amended the 1948 law, replaced the term "mining lease" with "petroleum lease", and came into force on 15 April 2025, to give investors more legal certainty.
• DGH: Set up in 1993 under the Ministry of Petroleum and Natural Gas, it is the technical regulator for exploration and production.

India's position

India is the world's third-largest consumer of oil. Its crude import dependence rose to a record 88.7% in 2025-26 (provisional), while domestic crude output fell to about 28 million tonnes. HELP, OALP, the release of "No-Go" offshore areas in 2022, and now the Samudra Manthan scheme are all parts of one long effort to raise domestic production.

Commonly confused concepts

• HELP vs OALP: HELP is the overall policy. OALP is the method of awarding blocks under HELP.
• HELP vs NELP: NELP (1999) used production sharing with cost recovery and government-chosen blocks. HELP (2016) uses revenue sharing and company-chosen blocks.
• Production Sharing Contract vs Revenue Sharing Contract: In a PSC, costs are recovered first and then profit is shared. In an RSC, the government gets a share of revenue from day one, without checking costs.
• DGH vs NDR: DGH is the regulator. NDR is the data bank run by DGH.
• OALP vs DSF: OALP is for exploring new areas. DSF is for developing small fields that have already been discovered.

Issues, criticism and the way forward

• Weak interest from big global firms: Most OALP blocks have gone to ONGC, OIL and a few Indian private firms. Large foreign oil companies have shown limited interest so far.
• Risk is high under revenue sharing: Since the government takes revenue from the start, a company that faces high costs still pays the same share. Companies say this makes risky deepwater projects less attractive. The 2023 reforms tried to fix this for frontier basins.
• Deepwater is costly and slow: Ultra-deepwater wells can cost hundreds of crores each, and many discoveries are never developed because transport costs are too high. This is why Samudra Manthan funds drilling and shared infrastructure.
• Gas pricing: Producers say government-set gas prices for older fields limit their earnings.
• Way forward: Better seismic data, faster approvals, stable tax and fiscal terms, shared offshore infrastructure, and partnerships with experienced global firms.

Concepts to Know

• Hydrocarbons: Natural compounds of hydrogen and carbon. Crude oil and natural gas are the main hydrocarbons.
• Exploration block: A defined area of land or sea given to a company to search for oil and gas.
• Royalty: A fixed percentage of the value of oil or gas produced that the company must pay to the government.
• Shale gas and coal bed methane: Natural gas trapped inside tight shale rock or inside coal seams. They need special methods to extract.
• Gas hydrates: Ice-like solids found under the deep seabed in which methane gas is trapped inside frozen water.
• Comptroller and Auditor General (CAG): The constitutional body that audits government accounts and spending.