Govt gives marketing freedom to domestic crude oil producers
New Delhi, June 29
The government today allowed oil-producing companies (E&P) like the ONGC, Oil India and Vedanta to sell their product to any Indian refinery for turning it into petrol and diesel, bringing in a major reform in the hydrocarbon sector.
Sharing details of the decision of the Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, Union Minister Anurag Thakur said the new policy would come into effect from October 1, as till then the E&P companies are mandated to sell according to government allocation system and can offload their produce only to public sector oil refiners.
“The Cabinet Committee on Economic Affairs has approved deregulation of sale of domestically produced crude oil, whereby the government has decided to cease the allocation of crude oil and condensate with effect from October 1, 2022,” the government said in an official statement, adding the move would ensure marketing freedom for all E&P operators.
He said the companies would have the freedom to sell crude oil in the domestic market. The ban on export would continue.
The ONGC can now auction 13-14 million tonne of crude oil a year produced from Mumbai High Field to any refinery, including private sector Reliance Industries Ltd and Rosneft-backed Nayara Energy.
The ONGC currently has to sell the Mumbai High Field crude oil to state-owned Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL). It could not sell the oil to its own Mangalore refinery.
“The condition in the production sharing contracts to sell crude oil to the government or its nominee or government companies shall accordingly be waived off,” the statement said, adding, “All E&P companies will now be free to sell crude oil from their fields in the domestic market.” The government revenues like royalty and cess will continue to be calculated on a uniform basis across all contracts.”
e-auction facility
- Now, domestic sellers can e-auction the crude to anyone paying the highest price unlike before
- In the present system, the government fixes the quantity each buyer will pick
- This limits the scope for price negotiation and sellers often sell oil at discount
