- The government has taken a refreshing and progressive approach with respect to the unutilised natural resources locked away in the 69 small and marginal oilfields lying with the state-owned exploration agencies.
- Approved the auction of these oilfields to private, and even foreign, companies, and initiated a new approach in the licensing and proceeds-sharing mechanisms.
- The first step was to move from a profit-sharing mechanism to a revenue-sharing mechanism.The revenue-sharing approach is simpler, and is likely to earn the government more money and reduces delays and disputes.
- Under the new plan, companies will be allowed to sell crude oil or natural gas at market prices, without any interference from the government.
- The revenue and royalty-sharing mechanism will be pegged at this market rate.
- The other welcome step has to do with the licensing method.
- Companies will receive a unified licence for all hydrocarbons, including conventional ones such as oil and gas, and non-conventional ones such as shale oil and shale gas.
- This shows government’s move towards enhancing the ease of doing business.
Let’s Dig out process of formation of crude oil? Shall we?