New Delhi: The government has earned its first profit share from Reliance Industries’ eastern offshore KG-D6 gas fields, with the operator and its Canadian partner paying $2.74 million for the first quarter.
RIL, which holds 90% interest in KG-D6, paid $2.47 million while Niko Resources of Canada paid $274,767 in profit petroleum for the April-June quarter, an official said.
According to the production-sharing contract, the RIL-Niko combine is allowed to first recover the investment it had made from the revenue earned out of the sale of oil or gas.
The contractor is entitled to deduct 90% of the sale proceeds of oil or gas towards capital and operational expenditure and the remaining part is shared as profit petroleum with the government. The unrecovered part of the cost is carried forward to the following year for recovery.
The government’s share in profit is 10% in the first year and rises to as much as 85% once all the cost is recovered, the official said.
The world over, oil and gas blocks are either auctioned to companies offering highest signing amount or given out in a production-sharing regime where the government and contractor share the revenue after allowing investment recovery.