The government has eased the terms of the revenue sharing contract to attract investors to the latest bidding round of discovered small fields, which has dragged on for nearly a year since its launch.

The government launched the third bidding round of the discovered small fields last June but postponed the bid submission window several times due to lukewarm investor appetite. The latest bid submission window is from April 20 to May 31.

The government has made several changes to the model revenue sharing contract in the third round. The new contract slashes by three-fourths the penalty imposed on contractors for not completing the promised bid work programme. For each well not drilled in the deep water, the penalty has been slashed to $1.5 million from $6 million earlier. Similar reductions have been made for onshore and shallow water wells.

The contract has redefined ‘arm’s length sale’, describing it as a transaction between buyer and seller-the two being not the same legal entity-that follows a transparent and competitive bidding process. The earlier definition of arm’s length sale barred sale to an affiliate.

The contractor can now extend the ‘development period’ by a maximum of one year by paying a fee.

The contract also adds an obligation on the contractor to take possession of all wells and facilities within 12 months from the date of signing of the contract.

The contractor will now have nine months, instead of six months earlier, to submit to the management committee a detailed field development plan.

If the contractor starts commercial production during the development period, the government share of revenue until the end of the development period shall be at the rate of $5per barrel of oil and 20 cents per mmBtu of natural gas or the share quoted by the contractor at lower revenue point, or whichever is lower.