New Delhi, The Union Cabinet's Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, on Wednesday approved deregulation of sale of domestically-produced crude oil.

As per the decision, the government has decided to cease allocation of crude oil and condensate with effect from October 1, to ensure marketing freedom for all Exploration and Production (E&P) operators.

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 will continue to be calculated on a uniform basis across all contracts. As earlier, exports will not be permissible. This decision 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," union Minister Anurag Thakur said.

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/industry, he said.

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