Petroleum licensing or exploration license is the act of giving licenses (geographical areas at land or sea) to a company or a joint venture allowing them to search for commercially feasible deposits for the extraction of petroleum.
In the bid system, each company or joint venture will offer a bid to gain the rights for the petroleum exploration at the license for a limited period of time.
In the grant system, the license will be granted to the company or joint venture that shows the highest interest and ability for the exploration of the license.
This can be shown by the company experience, projected plan for the exploration (by high investment) and or longest presence on the country as a petroleum exploration company.
If after the limited time, the company has not discovered or performed its minimal obligations (usually agreed with the government as a minimum number of exploration wells and investment on seismic ) the license will be relinquished.