Oil producers often feel that the Center’s allocation reduces their bargaining power relative to refiners. Sometimes, when crude is sent to remote refineries, it increases transportation costs.
According to an official statement, the Cabinet Committee on Economic Affairs (CCEA) has approved the plan to cease the allocation of crude oil and condensate from October 1.
He further stated that this decision will ensure marketing freedom for all exploration and production (E&P) operators. “The condition in the PSCs to sell crude oil to the government or its agent or government companies will therefore be lifted. All E&P companies will now be free to sell crude oil from their fields in the domestic market,” he said. Government revenues, such as royalties and taxes, will continue to be calculated on a uniform basis for all contracts.
Over the past eight years, the government has carried out several progressive reforms in the E&P sector, such as freedom in gas pricing and marketing, gas price discovery through competitive bidding process online competition, the introduction of revenue-sharing contracts under the hydrocarbon exploration authorization policy (AIDE) and so on.
