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Cabinet approves deregulation of sale of domestic crude oil
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IANS | 29 Jun, 2022
The Union Cabinet's Cabinet Committee on Economic Affairs (CCEA),
chaired by Prime Minister Narendra Modi, on Wednesday approved
deregulation of sale of domestically-produced crude oil.
As
per the decision, the government has decided to cease allocation of
crude oil and condensate with effect from October 1, to ensure marketing
freedom for all Exploration and Production (E&P) operators.
The
condition in the production sharing contracts (PSCs) to sell crude oil
to government or its nominee, or government companies shall accordingly
be waived off.
"All E&P companies will now be free to sell
crude oil from their fields in the domestic market. Government revenues
like royalty, cess will continue to be calculated on a uniform basis
across all contracts. As earlier, exports will not be permissible. This
decision will further spur economic activities, incentivise making
investments in the upstream oil and gas sector and builds on a series of
targeted transformative reforms rolled out since 2014," union Minister
Anurag Thakur said.
The policies relating to production,
infrastructure and marketing of oil and gas have been made more
transparent with a focus on ease of doing business and facilitating more
operational flexibility to operators/industry, he said.
The
government has carried out several progressive reforms in the E & P
sector in the last eight years such as pricing and marketing freedom for
gas, discovery of gas price through competitive e-bidding process,
introduction of Revenue Sharing Contracts under Hydrocarbon Exploration
Licensing Policy (HELP), etc.
A large number of blocks have since
been allotted through several bidding rounds. As a result of these
efforts, allocation of acreage has almost doubled as compared to area
awarded before 2014. Since February 2019, reforms have focussed on
production maximisation with no revenue sharing for difficult basins
other than windfall gain.
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