Cabinet approves deregulation of sale of domestically produced crude oil from Oct 1

Cabinet meeting, chaired by Prime Minister Narendra Modi, has approved the deregulation of the sale of domestically produced crude oil and condensate from October 1, 2022. The development was confirmed by Union Information and Broadcasting Minister Anurag Thakur in a press briefing following the Cabinet meet on Wednesday.

Earlier in the day, Business Today had reported, citing sources, that such a decision was in the pipeline and this move will encourage companies to boost crude oil production inside the country. India is the world’s third largest consumer of oil after the US and China. India depends on imports for fulfilling 85 per cent of its oil and energy requirements.

As per Thakur, this decision will ensure marketing freedom for all companies engaged in oil exploration and/or production. Exploration and production companies are free to sell crude oil from their fields in Indian market and exports shall continue to be prohibited.

Hailing it as a “win-win decision” for government and industry players, Thakur said, “Policies will be transparent and revenue will not be impacted. In fact, it will lead to an increase in exploration and domestic production [of crude oil]. Of the quota allocated to refineries, around 80-90 per cent was used in 2018-19 and 59 per cent in 2019-20.”

If the decision comes into effect, conditions in production sharing contracts to sell crude oil to government or any of its nominee(s) or government companies will be waived off.  Government revenues – royalty, cess, etc. -- will be calculated on uniform basis across contracts.

Oil imports from Russia have jumped over 50 times since April and make up for 10 per cent of all crude bought from overseas. Indian refiners bought about 25 million barrels of Russian oil in May.

(With inputs from Chetan Bhutani)

Also read: Govt to ease rules for selling domestic crude oil