Budget 2013: Move from profit to revenue sharing negative: Shell India

Vikram Mehta, former chairman, Shell India, shared his view on the Budget.

Below is the edited transcript of his interview to CNBC-TV18. Q: The oil and gas sector got a negative bias in this Budget and there are reports from KPMG which says that the moves to move from profit sharing to revenue sharing increased a substantial increase in the risk profile for E&P activities?
A: The FM only made an announcement that he was moving from profit to revenue sharing for production sharing contracts. This move discourages investment in high risk, geologically complex, expensive areas. Companies making investment will spend between or above USD 25-50 million per well and they will want to have the assurance that in the event of a discovery they are going to be able to recover their cost first before they start to share revenues. This, in some sense, is a regressive move.