Crude crash effect: Govt to sweeten oil and gas production sharing contracts, forms panel

With domestic crude production becoming increasingly unviable in the low global oil price regime, the government has decided to revise production sharing contracts (PSC) of private oil producers to spur investments. In this regard, the Ministry of Petroleum and Natural Gas has formed a committee which will “suggest ways of attracting investment in exploration, enhancing production and eliminating obstacles”.

As FE recently reported, the profit of private domestic crude oil producers from PSC fields has dwindled to as low as 20 cents per barrel. When crude ruled at $60 per barrel in January, these producers used to make a profit of around $6/barrel. “The scope of the committee would include to review existing PSCs, suggest methodology for increased exploration and production activities and changes required in existing policies/guidelines on implementation of these contracts,” the ministry’s order, reviewed by FE, said.