The Petroleum Ministry has once again extended the deadline for seeking comments on a simpler revenue sharing contract which it wants to replace the present Production Sharing Contracts (PSC) with.

The Ministry had on August 21 floated a model revenue sharing contract for exploration and production of oil and gas and sought comments from stakeholders by September 10. On September 11 it extended the deadline to September 20. The same has now been extended till the month-end.

“...the timeline for receiving comments on the draft Model Revenue Sharing Contract (MRSC) has been extended up to September 30, 2014,” a Ministry order said.

No reason was assigned for the extension.

Besides suggesting doubling of natural gas prices, a Committee headed by C Rangarajan had suggested moving to a revenue sharing regime where companies bid upfront the quantity of oil and gas they will share with the Government for winning an exploration acreage.

The Ministry accepted this in-principle, and floated a MRSC.

MRSC will replace the current practice of companies getting blocks by bidding maximum work programme and then recovering all of their investment before sharing profits with the Government. This model was criticised by CAG, which said it encouraged companies to keep raising cost so as to postpone higher share of profits to the Government.

In the new regime, the companies will have to indicate the quantity of oil and gas they will share with the Government at different stages of production as well as at different rates.

“The Government’s revenue share of crude oil and/ or natural gas shall be determined based on a two-dimensional production—price matrix, where Government’s revenue share with the contractor(s) shall be linked to the average daily production in a month and average oil and gas prices in a month,” the draft MRSC said.

Besides quoting the quantity they will share with the Government at different levels of production, the companies would also quote the quantum at different price levels — less than $100 per barrel, $100-125, $125—150 and more than $150 per barrel for oil and for gas in bands of less than $6 per million British thermal unit rate, $6—10, $10—14 and more than $14 per mmBtu.

The production levels for on-land, shallow offshore and deepwater have been proposed at different tranches.

Companies will have to bid the amount they will share with the Government at different levels of production as well as different rates for oil and gas.

“In the matrix, production is linked to a sliding scale (incremental) production tranche and price is linked to fixed scale price band,” the draft MRSC said.

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