India offers incentives to state-owned oil and gas firms

Oil and Natural Gas Corp Ltd and Oil India Ltd will pay royalty and cess tax only to the extent of their equity holding in oil and gas blocks given to them before 1999

business Updated: Jul 18, 2018 19:05 IST
Reuters
Reuters
Mumbai
India,oil and gas firms,Oil and Natural Gas Corp
An engineer of Oil and Natural Gas Corp (ONGC) works inside the Kalol oil field in the western Indian state of Gujarat September 12, 2009. (REUTERS File Photo)

Oil and Natural Gas Corp Ltd and Oil India Ltd will pay royalty and cess tax only to the extent of their equity holding in oil and gas blocks given to them before 1999, Oil Minister Dharmendra Pradhan said on Wednesday after a cabinet meeting

The companies had to pay 100 percent royalty and cess tax from the blocks under the earlier production sharing contract, making it a big disincentive to invest in production growth of the blocks, Pradhan said

Pradhan said the cabinet on Wednesday also extended the time period given to oil and gas companies to develop hydrocarbon blocks in the north eastern part of India. Production from these blocks will be linked to market prices of natural gas, the minister said

Pradhan said the government also decided to give tax exemption on capital spending on oil and gas blocks given before 1999, when India’s first bidding round was kicked off

It increased the number of days to announce force majeure due to a crisis on an oil and gas block located in a challenging region from seven days to 14 days, the minister said

Pradhan said these incentives will help the two state-owned companies invest in increasing production of oil and gas

First Published: Jul 18, 2018 19:04 IST