Cabinet approves deregulation of sale of domestically produced crude oil and move to ensure marketing freedom for all crude oil exploration and production companies.
All exploration and production companies will now be free to sell crude oil from their fields in the domestic market. Before the above, as per guidelines of production sharing contracts (PSCs), domestically produced crude oil was to be sold to the government or its nominees and PSUs.
According to Cabinet Minister Anurag Thakur, deregulation will lead to pricing and marketing freedom in the sector and boost production. In the long run, this will cut down the import without revenue loss. India imports 85 percent of its crude oil needs. Elevated crude oil prices have an inflationary impact on the economy and hurt its macroeconomic indicators.
India’s domestic crude oil production has been declining consistently since 2014-15. Even as demand soars, a decline in domestic production has led to a steady rise in imports. In 2021-22, India’s crude oil production was 29.69 million tonnes, 2.63 percent lower than the 30.5 million tonnes output a year ago. It was 11.67 percent below the target of 33.61 million tonnes for the year.