Among several decisions taken by the Cabinet Committee on Economic Affairs on Thursday to stimulate investments in hydrocarbon exploration...
Among several decisions taken by the Cabinet Committee on Economic Affairs on Thursday to stimulate investments in hydrocarbon exploration, it reduced the royalty rates for offshore oil and gas field acknowledging higher risks and costs involved in exploration and production from such areas.
The reduction in royalty rates in the new hydro-carbon exploration licensing policy (HELP) is aimed at mitigating risk for developers. In the graded royalty system approved by the CCEA, the rates decrease progressively from shallow water to deepwater and ultra-deep waters.
However, the royalty rate for onshore areas have been kept intact so that revenues to the state governments are not affected. Additionally, the provision of cess and import duty will not be applicable on blocks awarded under the new policy. HELP also provides for for marketing freedom for crude oil and natural gas produced from gas blocks where production is yet to commence.