Whalesbook
The Directorate General of Hydrocarbons (DGH) is accelerating plans for India's eleventh Open Acreage Licensing Policy (OALP-XI) round, offering 21 new blocks. This move occurs while bids for the preceding, larger OALP-X round remain significantly delayed. The DGH's strategy aims to show continued government commitment to domestic exploration and adapt to global energy market shifts.
The OALP-XI round will offer blocks covering approximately 80,235 square kilometers, divided into 12 onshore, four shallow water, one deepwater, and four ultra-deep sea areas. This initiative reflects India's ongoing effort to boost exploration and domestic energy production, supporting projected energy demand growth of 6.4% annually through 2030. Bid submission dates for OALP-XI are still to be announced.
OALP-XI refines bidding rules for different exploration stages. For Category-I basins with proven production, awards will go to bidders offering the highest revenue share combined with the most ambitious work program. For Category-II and III basins, which show hydrocarbon potential but lack commercial development, the highest work program, including seismic surveys and drilling, will be key. This tiered approach seeks to attract both established producers and specialized firms for higher-risk exploration.
The OALP-X round, which offered a much larger 25 blocks across roughly 191,986 sq km, has faced repeated postponements. Launched in February 2025, its bid deadline has been extended four times, now set for May 29, 2026. Industry watchers suggest investor caution, the need to fully absorb new regulations from the Oilfields (Regulation and Development) Amendment Bill, and global energy transition pressures are contributing to these delays. The protracted timeline for OALP-X raises questions about market absorption and execution pace.
India's energy demand is a major factor, projected to drive global growth through 2035. Despite renewable energy expansion, coal use persists, and oil imports remain substantial, costing $90.7 billion for April-December FY26. Key Indian energy companies show varied valuations: Oil India Ltd (OIL) and ONGC trade at P/E ratios around 10-13x. Vedanta's P/E ratio has fluctuated, with a forward P/E of 8.87x suggesting optimism, though it's rated 'Significantly Overvalued' by GuruFocus. Reliance Industries Ltd trades between 18.66x and 23.0x P/E. In the prior OALP-IX round, ONGC, OIL, and Vedanta were active participants, with ONGC securing the most blocks.
Despite government efforts, the oil and gas exploration sector faces challenges. Global exploration activity has declined, increasing finding costs and making investors hesitant, especially for frontier areas. The energy transition also redirects capital towards renewables. While India's electricity demand grows, it's met mainly by renewables and coal, potentially reducing upstream exploration focus. Vedanta, for example, faces analyst concerns about its valuation.
The DGH's push for OALP-XI underscores a commitment to energy security and reduced import dependence, crucial given India's rising energy needs. Brent crude oil prices remain high at $116.18/Bbl on March 30, 2026, reinforcing the importance of domestic production. Analysts project positive outlooks for Reliance Industries, with BUY ratings. India aims to raise natural gas's share in its energy mix from 7.6% to 15% by 2030, further supporting exploration. The success of OALP-XI will hinge on the attractiveness of its blocks and the clarity of its bidding process, particularly following the OALP-X delays.