The Cabinet Committee on Economic Affairs (CCEA), chaired by the prime minister Narendra Modi, has approved the deregulation of sale of domestically produced crude oil.

The government has decided to cease allocation of crude oil and condensate with effect from October 1, 2022, the Ministry of Petroleum and Natural Gas says in a statement.

This will ensure marketing freedom for all exploration and production (E&P) operators, the Centre says, adding that 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, etc. will continue to be calculated on a uniform basis across all contracts," the statement says. "As earlier, exports will not be permissible."

The deregulation of domestic crude 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, the ministry says.

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, it adds.

The government says it has carried out several progressive reforms in the E&P sector in 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," the ministry says. "Since February 2019, reforms have focussed on production maximization with no revenue sharing for difficult basins other than windfall gain."

Meanwhile, the Union Cabinet was also apprised of a strategic partnership agreement signed between the Ministry of New and Renewable Energy (MNRE) and the International Renewable Energy Agency (IRENA).

The aim of the agreement is to drive ambition, leadership and knowledge on green energy transitions based on renewable energy in India. The agreement is expected to help India’s energy transition efforts and will also help the world in combating climate change.

The areas of cooperation as envisaged in the strategic partnership agreement will support India in achieving its ambitious target of 500 GW of installed non-fossil fuel electricity capacity by 2030, the government says.

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