The government has rolled out major incentives in royalty rates to attract investments into the oil and gas exploration and maximise production. The government has given its go ahead to concessional royalty if production commences before four years for onland/shallow water blocks and before five years for deepwater/ultra-deepwater blocks from the effective date of contract, top officials said. “Concessional royalty at the rate of 10%, 20% and 30% has been proposed for category-I, II and III basins respectively. In case commercial production is not commenced in the time period mentioned, then royalty at existing rates will be applicable. A royalty interest in the oil and gas industry refers to ownership of a portion of the resource or revenue that is produced. A company or person that owns a royalty interest does not bear any of the costs of the operations needed to produce the resource yet gets a portion of resource or revenue produced.

(Economic Times)