New Delhi, May 12: The government has reduced the royalty burden on crude oil and casing head condensate produced from deepwater and ultra-deepwater offshore blocks, in a move aimed at encouraging exploration and improving domestic energy output, according to revised provisions under the oil and gas regulatory framework.
Revised Royalty Structure
As per the updated schedule, royalty for deepwater blocks has been set at 5 per cent for the first seven years of commercial production, increasing to 10 per cent from the eighth year onwards.
For ultra-deepwater blocks, no royalty will be levied for the first seven years, after which a 5 per cent royalty rate will apply.
The revised framework also applies across multiple allocation regimes, including nomination-based awards to national oil companies, pre-NELP blocks, as well as areas awarded under the Hydrocarbon Exploration and Licensing Policy (HELP) and Discovered Small Field (DSF) Policy.
Impact Across Oil and Gas Sector
For onshore and shallow water fields, existing royalty rates—largely around 12.5 per cent—remain unchanged in most categories, while select offshore categories continue under previously defined rates or production-sharing contracts.
Officials said the rationalisation is intended to make deepwater exploration more financially viable, especially as India seeks to expand domestic production and reduce import dependence amid volatile global energy markets.
Energy Security Amid Global Uncertainty
The move comes at a time of heightened global uncertainty, driven by geopolitical tensions and fluctuations in crude oil supply chains. The government reiterated that India currently maintains adequate stocks of petroleum products, and LPG supply for domestic consumption remains stable.
The policy adjustment is seen as part of a broader strategy to strengthen energy security, attract investment in high-risk exploration zones, and boost long-term domestic output in the oil and gas sector.