NEW DELHI: The government has switched back to the two-decades-old method of auctioning oil and gas blocks in areas with poor prospectivity on the basis of exploration work committed by bidders instead of awarding acreages to companies offering the highest revenue share.
In highly prospective areas, the weightage of revenue share for awarding of blocks has been reduced from 50% to 30% and revenue-sharing capped at 50% to guard against disincentivise higher production.
The government will not take any share of production or profit from companies if a discovery is made in block in non-prolific areas. The entire output and revenue will accrue to the company. But the government will take a share of any windfall gain, the trigger for which has been set at $2.5 billion in a financial year from a block.
