Union Finance Minister P Chidambaram informed foreign investors that the union government plans to liberalise pricing regime in the oil and gas sector in order to attract more investment into the sector.
The government is also considering a cabinet note on how to move from a production sharing model to revenue sharing model for oil and gas explored and excavated by companies.
Foreign investors can hold upto 100 percent stake in domestic exploration and production projects of oil and gas sector. These projects are under a production sharing regime, wherein the companies get to recover all their investment before sharing profits with the government.
However, the government plans to shift from the production sharing regime to revenue sharing model as the former regime was criticised by the Comptroller and Auditor General (CAG).
Under the new regime being contemplated, companies will be asked to bid for the amount of oil and gas they will share with the government from the very first day of output.