New Delhi, May 12: The Centre has reduced the royalty burden on crude oil and casing head condensate production from offshore deepwater and ultra-deepwater blocks, as part of revised provisions under India’s oil and gas regime.
Under the new structure, deepwater projects will attract a royalty of 5 per cent for the first seven years from the start of commercial production, increasing to 10 per cent from the eighth year onwards. For ultra-deepwater blocks, no royalty will be charged during the initial seven years, followed by a concessional 5 per cent rate thereafter.
The revised schedule applies across multiple exploration regimes, including nomination-based awards to national oil companies, pre-NELP blocks, and those awarded under the Hydrocarbon Exploration and Licensing Policy (HELP) and Discovered Small Field (DSF) Policy. However, production-sharing contracts under earlier agreements will continue with their existing royalty structures.
For onshore and shallow water areas, royalty rates largely remain unchanged at 12.5 per cent, while select offshore categories will see reduced levies. A 7.5 per cent royalty rate has also been retained for certain specified segments.
The move is aimed at incentivising investment in technically challenging offshore exploration, particularly in deepwater zones where development costs are significantly higher.
The policy revision comes amid heightened global energy uncertainty due to the ongoing West Asia conflict and volatile crude prices. The government has maintained that India has adequate petroleum stocks and uninterrupted LPG supply for domestic consumption.
Prime Minister Narendra Modi has also urged citizens to conserve fuel, reduce non-essential imports such as gold, and limit foreign travel to ease pressure on foreign exchange reserves during the ongoing global economic challenges.
