Panel backs old system for oil block bid

Panel backs old system for oil block bid

1. A High level panel headed by NITI AAYOG Vice chairman Rajiv Kumar, has advised government to shift from the present revenue sharing contracts for oil and gas block auctions to the older system of production sharing contract.
2. In Production sharing,firms offering the largest work programmes (such as carrying out seismic survey and drilling of wells) was given the blocks.In this, Investment company will invest all capital and take huge risks.Once, resources are found and developed such as oil fields, then company can recover all their capital and investments.Later, the profit oil or production is shared between government and company.
3. In Revenue sharing,firms offering highest revenue to the government was given the blocks.Revenue will be shared between the government and OGECs (Oil and gas exploration companies) from the first batch of production of the oil and gas itself.