• 9964432222
  • Mail Us
  • Appointment
  • Locate Us
  • Chat Now
  • Courses
  • Login
  • Register
Manifest IAS
JournalsOfIndia
Manifest Learning Academy
  • Home
  • SNIPPETSfor Prelims
  • ARTICLESfor Mains
  • BROWSEBY SOURCE
  • DOWNLOADS
No Result
View All Result
  • Home
  • SNIPPETSfor Prelims
  • ARTICLESfor Mains
  • BROWSEBY SOURCE
  • DOWNLOADS
No Result
View All Result
JournalsOfIndia
No Result
View All Result
Home Economy

Production Sharing Contract

February 10, 2021
in Economy
Reading Time: 4 mins read
0
Production Sharing Contract
400
VIEWS
Share on WhatsAppShare on TelegramShare on Facebook
image_pdfMake PDF

In News: Government has taken multiple steps to enhance exploration & production of oil and gas to reduce imports and make the country AtmaNirbhar through various policies under Production Sharing Contract (PSC) regime.

About Production Sharing Contract (PSC)

  • Production Sharing Contract (PSC) is a term used in the Hydrocarbon industry and refers to an agreement between Contractor and Government whereby Contractor bears all exploration risks, production and development costs in return for its stipulated share of (profit from) production resulting from this effort. 
  • The costs incurred by the contractor are recoverable in case of commercial discovery. Thus, PSC is a fiscal regime existing in the exploration and production of hydrocarbons.  
  • Production Sharing Contracts became widely adopted as part of the New Exploration and Licensing Policy (NELP) launched by the Government in 1997 for enhanced exploration of oil and gas resources in the country.
  • The Production Sharing Contracts (PSCs) under NELP are based on the principle of “profit sharing”.  
  • When a contractor discovers oil or gas, he is expected to share with the Government the profit from his venture, as per the percentage given in his bid.  Until a profit is made, no share is given to the Government, other than royalties and cesses. Thus, in production sharing contracts (PSC), Government’s take depends on biddable share of profit petroleum/ gas after allowing for cost recovery. 
  • In other words, PSC allows the contractor to recover his cost, before giving the Government its share in the contractor’s revenues, in case there is commercial discovery leading to production (Not all drilling leads to discovery of oil/gas). Thus, a certain proportion of the balance revenues of the contractor are shared with the Government.
  • The PSC regime has been changed with a revenue sharing contract model in 2016.
  •  However, the new regime is applicable only for future contracts that would be awarded by the Government.

Production Sharing Contract (PSC) regime for early monetization of hydrocarbon discoveries, Discovered Small Field Policy, Hydrocarbon Exploration and Licensing Policy, Policy for Extension of Production Sharing Contracts,  Policy for early monetization of Coal Bed Methane, Setting up of National Data Repository, Appraisal of Unappraised areas in Sedimentary Basins, Re-assessment of Hydrocarbon Resources, Policy framework to streamline the working of Production Sharing Contracts in Pre-NELP and NELP Blocks, Policy to Promote and Incentivize Enhanced Recovery Methods for Oil and Gas, Policy framework for exploration and exploitation of Unconventional Hydrocarbons under existing Production Sharing Contracts, Coal Bed Methane contracts and Nomination fields.

The New Exploration Licensing Policy (NELP) 

  • The Government of India formulated a policy called New Exploration Licensing Policy in 1997. 
  • The main objective was to attract significant risk capital from Indian and Foreign companies, state of part technologies, new geological concepts and best management practices to explore oil and gas resources in the country to meet rising demands of oil and gas. 
  • This policy, NELP was approved in 1997 and it became effective in February, 1999 Since then licenses for exploration are being awarded only through a competitive bidding system and National Oil Companies (NOCs) are required to compete on an equal footing with Indian and foreign companies to secure Petroleum Exploration Licences (PELs). 
  • Nine rounds of bids have so far been concluded under NELP, in which production sharing contracts for 254 exploration blocks have been signed.

The salient features of NELP are as under: 

  • 100% FDI is allowed under NELP 
  • No mandatory state participation through ONGC/OIL or any carried interest of the Government. 
  • Blocks to be awarded through open international competitive bidding. 
  • ONGC and OIL to compete for obtaining the petroleum exploration licenses on a competitive basis instead of the existing system of granting them PELs on nomination basis. 
  • ONGC and OIL to get the same fiscal and contract terms as private companies. 
  • Freedom to the contractors for marketing of crude oil and gas in the domestic market. 
  • Royalty at the rate of 12.5% for the onland areas and 10% for offshore areas. 
  • Royalty to be charged at half the prevailing rate for deep water areas beyond 400 m bathymetry for the first 7 years after commencement of commercial production. 
  • Cess to be exempted for production from blocks offered under NELP. 
  • Companies to be exempted from payments of import duty on goods imported for petroleum operations. 
  • No signature, discovery or production bonuses. 
  • A Model Production Sharing Contract (MPSC) which is reviewed for every NELP round. 
  • Contracts to be governed in accordance with applicable Indian Laws.

 

 

image_pdfMake PDF
Source: PIB and petroleum.nic.in
Tags: PIBPrelims

Related Posts

The trade-plus-one(T+1) settlement plan

The trade-plus-one(T+1) settlement plan

January 27, 2023
SEBI’s information database on municipal bonds

SEBI’s information database on municipal bonds

January 25, 2023
Caller Name Presentation (CNAP) proposal by TRAI

Caller Name Presentation (CNAP) proposal by TRAI

January 20, 2023
Oxfam Report -‘Survival of the Richest’

Oxfam Report -‘Survival of the Richest’

January 19, 2023
Draft National Retail Trade Policy

Draft National Retail Trade Policy

January 19, 2023
World Social Report 2023

World Social Report 2023

January 18, 2023
Indian Railways deal with Siemens for high horsepower engines

Indian Railways deal with Siemens for high horsepower engines

January 18, 2023
Coal Ministry relaxation in Performance Bank Guarantee

Coal Ministry relaxation in Performance Bank Guarantee

January 17, 2023
New Umbrella Entity

New Umbrella Entity

January 9, 2023
Sovereign Green Bonds (SgrBs)

Sovereign Green Bonds (SgrBs)

January 9, 2023
Please login to join discussion

Our Offline Classroom Student

CONGRATULATIONS TO 2021 TOPPERS !!!

Rank 171 Kumar Shivashish
Rank 250 Sahithya
Rank 263 Sumit Kumar Thakur
Rank 311 Deepak Ramachandra Shet
Rank 455 Ravinandan B M

January 2023
MTWTFSS
 1
2345678
9101112131415
16171819202122
23242526272829
3031 
« Dec    

Browse by Category

  • Agriculture
  • Disaster Management
  • Economy
  • Environment
  • Ethics
  • Foreign Affairs
  • Geography
  • Governance
  • History
  • Law & Policy
  • Opinion
  • People in News
  • Places in News
  • Science & Tech
  • Security
  • Society
  • Sports
  • Uncategorized

Browse by Tags

AIR All India Radio BBC Business Line Business Standard dow Down to Earth DownToEarth DTE Economic Times ET FAO Financial Express GS-1 GS-2 GS-3 GS-4 Hindustan Times IE India & the world Indian express Indiatoday India today Kurukshetra Livelihoods portal LiveMint Mains News News Paper Newspaper PIB Prelims PRS India RSTV Science Reporter Survey The Hindu The India Express The Indian Express The Print the wire Times of India TOI TOPPERS Yojana
JournalsOfIndia

Our vision is to orient the readers to grasp the facts objectively and analyse critically. In the rush of reaching first to the readers, the websites miss the balanced opinion, which is the need of the hour. We aim to reach the readers with more crispness, preciseness and relevance. We bring the articles in UPSC way for the civil services aspirants and the Wisest Way for general readers.

Categories

  • Agriculture
  • Disaster Management
  • Economy
  • Environment
  • Ethics
  • Foreign Affairs
  • Geography
  • Governance
  • History
  • Law & Policy
  • Opinion
  • People in News
  • Places in News
  • Science & Tech
  • Security
  • Society
  • Sports
  • Uncategorized

Browse by Tag

AIR All India Radio BBC Business Line Business Standard dow Down to Earth DownToEarth DTE Economic Times ET FAO Financial Express GS-1 GS-2 GS-3 GS-4 Hindustan Times IE India & the world Indian express Indiatoday India today Kurukshetra Livelihoods portal LiveMint Mains News News Paper Newspaper PIB Prelims PRS India RSTV Science Reporter Survey The Hindu The India Express The Indian Express The Print the wire Times of India TOI TOPPERS Yojana

Newsletter

The most important UPSC news and events of the day.

Get Journals daily newsletter on your inbox.

© 2020 JournalsOfIndia - A free initiative by Manifest Team.

  • Login
  • Sign Up
  • Home
  • SNIPPETS
  • ARTICLES
  • BROWSE
  • DOWNLOADS
No Result
View All Result

© 2020 JournalsOfIndia - A free initiative by Manifest Team.

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In