New Delhi, Aug. 7: State-owned exploration companies ONGC and Oil India as well as gas transporter GAIL (India) are likely to be exempted from the subsidy-sharing mechanism this fiscal because of a slump in global crude prices.

"ONGC, Oil India and GAIL may not be asked to share the subsidy burden this fiscal as it is likely to be met from the budgetary provisions," a senior oil ministry official said. However, he said a final decision would be taken in the later part of the fiscal.

Analysts said going by the current global crude prices and estimates by different research firms and traders, a major spike in prices was unlikely in this fiscal. However, the conflict in Syria and its impact on global production centres is a concern.

The government has estimated global crude rates at around $44 a barrel for this fiscal. It has provided Rs 26,947 crore for oil subsidy from its budgetary resources for 2016-17.

After the decontrol of petrol and diesel prices, ONGC, Oil India and GAIL have to compensate for the under-recoveries of oil marketing companies on the sale of kerosene and domestic cooking gas. This helps to reduce the gap between the sale and purchase price of these commodities for companies such as Indian Oil Corporation, Bharat Petroleum Corporation Ltd and Hindustan Petroleum Corporation Ltd.

The Centre has capped its budgetary support on kerosene at Rs 12 per litre. Any gap between the market and selling price of the fuel after this support has to be borne by the upstream companies. The current gap stands at Rs 13.12 for kerosene. For domestic cooking gas, the cash transfer to customers under the direct benefit transfer will be Rs 116.34 per cylinder.

Together ONGC, Oil India and GAIL have provided Rs 42,822 crore as their share of subsidy in 2014-15. ONGC provided Rs 36,300 crore, Oil India Rs 5,523 crore and GAIL Rs 1,000 crore.

The government's move will provide relief to exploration and production companies, which are grappling with squeezed margins because of low crude prices and are looking at other avenues to mobilise resources for more investments.

The margins of exploration companies have been hit by an increased cess on domestic crude production.

Petroleum minister Dharmendra Pradhan is in favour of seeking a relief from the finance ministry to cut the cess to 10-12 per cent from 20 per cent. "It should be according to market dynamics. I am recommending to the ministry of finance to look into the expectations of the exploration and production sector," he said.

Finance minister Arun Jaitley in the budget had moved to an ad valorem rate of 20 per cent from a fixed Rs 4,500 per tonne cess on domestic crude, a move aimed at providing relief to upstream companies.

At a crude price of $45 per barrel, the old rate of Rs 4,500 per tonne and the new ad valorem rate are evened out. If prices go up, the companies will have to pay more.