Industry welcomes deregulation of locally produced oil, Auto News, ET Auto

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While contracts for oilfields awarded since 1999 gave producers the freedom to sell oil, the government secured buyers for crude produced from older fields such as ONGC’s Mumbai High and Vedanta’s Ravva.

New Delhi: Union Cabinet decision to give crude oil producers freedom to sell oil to any Indian refinery will help boost government revenue and attract investment in exploration and production , industry executives said. On June 29, the government allowed companies like ONGC and Vedanta to sell locally produced crude oil to any Indian refinery for processing into fuels such as gasoline and diesel.

While contracts for oilfields awarded since 1999 gave producers the freedom to sell oil, the government secured buyers for crude produced from older fields such as ONGC’s Mumbai High and Vedanta’s Ravva.

Vedanta chairman Anil Agarwal called the decision a “landmark” that will “help increase government revenue”.

“India has vast reserves of hydrocarbons and can produce oil and gas at the lowest cost. boost India’s domestic production,” he added. .

The move, he said, “will attract many national and international companies to do exploration and production in India and encourage international investment in the sector.”

“We at Vedanta Cairn Oil & Gas are committed to making an investment of $4 billion and contributing 50% of India’s domestic hydrocarbon production,” he said without giving a time frame. to achieve the goal.

A senior Oil and Natural Gas Corporation (ONGC) official also welcomed the decision, saying it did not make sense for the government to decide on buyers when prices were already deregulated. From October 1, ONGC can auction its 13-14 million tonnes per annum of crude oil produced from the Mumbai High field to any refiner, including the private sector Reliance Industries Ltd and Nayara Energy, backed by Rosneft.

The company is currently due to sell crude oil from Mumbai High to state-owned companies Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL). He could not sell the oil to his own refinery in Mangalore, which had designed a petrochemical complex on the assumption that five million tonnes of Mumbai High crude could be turned into value-added PTA and benzene.

ONGC can auction crude oil produced from other locations such as Gujarat, Assam and the East Coast. Oil India Ltd (OIL) can also do the same.

Vedanta’s Cairn Oil & Gas will be granted the freedom to sell oil from its Ravva oil field in the eastern offshore. It currently only sells Ravva crude to HPCL.

The company, however, already sells oil from its main fields in Rajasthan to public and private sector refiners.

The Rajasthan contract provides for the sale of crude to the government or its designated levy. But it also says the company is free to sell it to anyone in case the government or its agent is unable to buy the rough.

Welcoming the move, Prachur Sah, Deputy Managing Director of Cairn Oil & Gas, said it was an important move that will further encourage the exploration, production and marketing of oil and gas in the country.

“This deregulation will attract more foreign players, encourage competition and also help producers achieve higher price realization and better return on investment,” he said.

“Freedom to market will lead to optimal price realization and support faster monetization of India’s resource base. This move will play a key role in India’s journey to energy aatmanirbharta.”

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