The Centre has announced a reduction in royalty rates for crude oil and casing head condensate production from offshore deepwater and ultra-deepwater blocks. Under the new provisions, deepwater areas will have a fixed royalty rate of 5% for the first seven years of commercial production, increasing to 10% from the eighth year onwards. Ultra-deepwater blocks will be exempt from royalty charges for the initial seven years, with a 5% royalty applying thereafter.
The revised royalty schedule also extends to areas allocated under various regimes, including national oil company awards, pre-NELP blocks, and areas under HELP and DSF policies. While onland and shallow water areas will maintain a 12.5% royalty rate in most cases, certain offshore and ultra-deepwater categories will see reduced levies.
Furthermore, specific categories will retain a 7.5% royalty rate as per the updated framework, with existing production-sharing contracts continuing under their respective agreements. This move by the government coincides with global economic pressures stemming from the West Asia conflict and energy market volatility.
Amidst these developments, the government assures the availability of ample petroleum product stocks and ongoing LPG supplies for domestic use. Recent global tensions, including US-Iran relations, have prompted calls for conservation measures by leaders like US President Donald Trump and Indian Prime Minister Narendra Modi, who urge restraint in gold purchases, foreign travel, and fuel consumption to safeguard foreign exchange reserves.
