Panel favours older oil hunt rules
The BJP-led NDA government had two years ago moved from production sharing contracts
- Published 18.02.19, 1:34 PM
- Updated 18.02.19, 1:34 PM
- a min read
Two years after the government shifted to revenue sharing contracts for oil and gas block auctions, a high-level panel has suggested reverting back to the older system of awarding areas in most basins based on the exploration commitment.
The six-member panel, headed by Niti Aayog vice-chairman Rajiv Kumar, which was formed on the directions of Prime Minister Narendra Modi, in its report submitted on January 29 stated that “unexplored areas in Category II & III basins be bid out exclusively based on exploration work programme”.
“No revenue or production sharing other than payment of statutory levies (including royalty)” should be the criteria, it said.
“However, in the case of windfall gain, defined as revenue of more than $2.5 billion in a financial year from the block, then 50 per cent sharing of incremental revenue above $2.5 billion,” it added.
The BJP-led NDA government had two years back moved from production sharing contracts, where acreage for exploration of oil and gas was allocated to firms offering the largest work programmes (such as carrying out seismic survey and drilling of wells), to revenue sharing contracts, where the firm offering highest revenue to the government was given the blocks.
The move to revenue sharing was contrary to most of the industry players being against the new regime.
India has 26 sedimentary basins measuring 3.14 million square kilometers. These are classified into four categories.
The committee included cabinet secretary P. K. Sinha, economic affairs secretary Subhash Chandra Garg, oil secretary M. M. Kutty, Niti Aayog CEO Amitabh Kant and ONGC chairman and managing director Shashi Shanker.
The government has formed a group of ministers to process the recommendations of the panel, sources said.