NEW DELHI: The Union Cabinet on Wednesday approved deregulation of sale of domestically produced crude oil in a bid to remove irregularities and boost revenue.
Briefing the media on the decisions take by the Cabinet, minister Anurag Thakur said that the move will ensure marketing freedom for all exploration and production (E&P) companies.
The provision will come into effect from October 1, 2022.
"All E&P companies will be free to sell crude oil from their fields to the domestic market," Thakur said.
All condition in Production Sharing Contracts (PSC) to sell crude oil to the government or its nominee or government companies will be waived.
This will give marketing freedom to domestic crude oil producers, allowing them to sell oil to whosoever they want.
The Centre at present decides which state-run refinery gets how much crude from each producer. The price is then worked out on a traditional formula with Brent as a marker, instead of the global practice of a ‘five-cut’ – or yield of five most-used refined products – norm. The allocation is done every six months.
Government revenues like royalty, cess will continue to be calculated on uniform basis across all contracts, Thakur added.
