New Delhi, Feb 28 (IANS): Oil and gas exploration contracts will now be awarded on a revenue-sharing basis, shifting from the current profit-sharing one, Finance Minister P. Chidambaram announced Thursday.

"A new oil and gas exploration policy will move from profit-sharing to revenue-sharing contracts," Chidambaram said in his Budget 2013 speech in the lower house of parliament Thursday.

Current Production Sharing Contracts (PSCs) provide for explorers to first recover all of their capital and operating expenditure from oil and gas revenues before sharing profits with the government under a specific formula.

Announcing a series of initiatives to boost India's energy security, Chidambaram said the government will bring in a policy to encourage exploration of shale gas.

Chidambaram also declared that the pricing of natural gas will be reviewed so as to remove the "uncertainties" on the issue.

Gas pricing is currently determined under the New Exploration Licensing Policy (NELP). Reliance Industries, for instance, gets $4.2 per million British thermal unit (mbtu), for KG-D6 field gas, which it wants revised upward.

If recommendations of the Rangarajan committee, which has given its report on gas pricing, are accepted, domestic gas prices are expected to be in the range of $7-8.