Cabinet has taken a new stance to extract more profits from oil and gas companies. The Cabinet has approved a policy, wherein it will extend the licenses pertaining to oil and gas contracts of the companies that agree to pay an additional 10% profit share to the government. The government's new stance is expected to gain an additional revenue of about USD 5.43 billion.
Cairn India’s oilfield in Rajasthan is one of the beneficiaries of this decision. Cairn has a 25-year contract for RJ-ON-90/1 that expires in the month of May 2020. The company is in talks with the government for getting a 10-year extension.
The extension will be approved by the Cabinet Committee on Economic Affairs (CCEA), only if the company agrees to pay 10% profit from sale of petroleum during the extended life of the contract.