Government to adopt revenue-sharing model for oil and gas blocks

Government to adopt revenue-sharing model for oil and gas blocksThe central government has indicated that it is considering moving to a revenue-sharing model for the operators of oil and gas blocks in the country.

Finance minister P. Chidambaram said that the government is planning to adopt the new revenue-sharing model instead of a profit-sharing model for calculation the share of profit that is to be paid to the government by the operators. The government is considering the new model following the recommendations of the Rangarajan committee on formulating new production-sharing contracts between operators and the government.

The committee recommended that the government should look to move away from its cost recovery model to a new revenue sharing model. While presenting the Union budget for 2013-14 on Thursday, Chidambaram said that government will soon release the natural gas pricing policy and also take steps to address the bottlenecks in the oil and gas blocks that have been awarded by the government.

Chidambaram also said that the policy for shale gas exploration in India will also be formulated by the company. He also said that the government will soon announce a policy that will be aimed at encouraging exploration and production of shale gas in the country.