ONGC is regarded as the “bad boy” in the Cairn-Vedanta agreement, has told that it had never been against the bearing of the weight of royalty on behalf of the Rajasthan oil fields. However simultaneously, it desires to reduce its own burden by way of rendering the royalty ‘cost-recoverable' as mentioned in the contract signed for the field.

This also represents that it wishes a payment of royalty for the fields to be a part of the project expenditure while measuring the profit-petroleum. Therefore, there would be sharing of the royalty weight by all stakeholders.

The production-sharing contract for the Rajasthan fields holds that the royalty must be carried by the holder of the license of the fields, which in the present case is ONGC. The royalty rate that is valid for the block is 6.67% upon the total cost of crude oil.

The payment of royalty is done on the total quantity of crude oil produced from the block. A payment of cent per cent royalty is made by ONGC, despite its share in the field being only 30%. The holding of Cairn is the remaining 70%.