The government has approved the liberalization of the selling of locally produced crude oil.

Union Minister Anurag Thakur stated on Wednesday that the Cabinet has authorized the liberalization of the sale of domestically produced crude oil.

The need in Production Sharing Contracts (PSC) to sell crude oil to the government or its nominee or government entities will be lifted on October 1. This implies that producers will be able to sell oil from their fields on the domestic market.

The federal government now chooses which state-run refinery receives how much oil from each source. Following that, the price is calculated using a standard formula with Brent as a benchmark, rather than the worldwide practice of a 'five-cut' or yield of the five most used refined products-norm.

This is expected to increase government income and enable firms like Oil India and Oil and Natural Gas Corporation (ONGC) receive better prices for their petroleum.

Because royalties and cess are levied as a percentage of the price, this improved realization for oil corporations may increase the Centre's royalty and cess income. The cess is set at 20%, while the royalty is set at 20% for onshore output and 10% for offshore production.

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