Oil, gas production contracts on revenue-sharing basis

Published: 28th February 2013 01:17 PM  |   Last Updated: 28th February 2013 01:53 PM   |  A+A-


Oil and gas exploration contracts will now be awarded on a revenue-sharing basis, shifting from the current profit-sharing one, Finance Minister P. Chidambaram announced Thursday.

"A new oil and gas exploration policy will move from profit-sharing to revenue-sharing contracts," Chidambaram said in his Budget 2013 speech in the lower house of parliament Thursday.

Current Production Sharing Contracts (PSCs) provide for explorers to first recover all of their capital and operating expenditure from oil and gas revenues before sharing profits with the government under a specific formula.

Announcing a series of initiatives to boost India's energy security, Chidambaram said the government will bring in a policy to encourage exploration of shale gas.

Chidambaram also declared that the pricing of natural gas will be reviewed so as to remove the "uncertainties" on the issue.

Gas pricing is currently determined under the New Exploration Licensing Policy (NELP). Reliance Industries, for instance, gets $4.2 per million British thermal unit (mbtu), for KG-D6 field gas, which it wants revised upward.

If recommendations of the Rangarajan committee, which has given its report on gas pricing, are accepted, domestic gas prices are expected to be in the range of $7-8.

Stay up to date on all the latest Nation news with The New Indian Express App. Download now


Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on are those of the comment writers alone. They do not represent the views or opinions of or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp