Quick Note - India oil & gas - Royalty reduction rolled back

Research evidence excerpt

Quick Note - India oil & gas - Royalty reduction rolled back

Global Markets Research

11 June 2026India oil & gas

EQUITY: OIL & GAS/CHEMICALS

Royalty reduction rolled back Research Analysts

India Oil & Gas/Chemicals

Bineet Banka, CFA - NFASLQuick Note bineet.banka@nomura.com

+91(22)4037 4044AccordingtoagovernmentofIndia notification releasedon4 tJune,thegovernmenthas

revisedroyaltyonupstreamoilproductionfornominationonshorefields,reversingthe

reliefprovidedintheearlier notification dated8May(seeour report).WeexpectOil

India(OINLIN,Neutral)tobemostimpactedduethisrevisedorderasallofitsoil

productionvolumecomesfromonshorefields.

Oil royalty rates: The royalty rates on oil for nomination onshore fields have been revised

back to 20% (16.67% cum rate) from 12.5% (11.1% cum rate).

Gas royalty rates: There has been no change in royalty rates for gas.

For nomination oil and gas blocks, Royalty is calculated on cum-royalty basis according to

the formula below:

Royalty amount = ((Well head price – ad valorem deduction))*royalty rate/(100 + royalty

rate)

Impact on Oil & Natural Gas (ONGC IN, Neutral) and Oil India

We estimate a ~2.5-3% PBT impact for ONGC due to the reversal in royalty relief as

discussed above. Impact on Oil India is expected to be much higher at ~8-9% on PBT due

to almost all of its production from onshore fields while only ~33% of ONGC’s production

comes from onshore fields.

With the reversal of royalty rates benefit to nomination fields the government wants to

protect its revenue which has already taken a hit from excise duty cuts on liquid fuel sales.

The government has kept royalty rates on deepwater and ultra deepwater at attractive

levels, where it wants to promote more investments by private players.

Maintain Neutral on ONGC and Oil India