Page 41 - Policy Economic Report - June 2024

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Key Policy developments/significant news in Energy sector

Govt. reduces windfall tax on crude petroleum to Rs. 3,250/tonne

The government announced a decrease in the windfall tax on domestically crude oil to Rs. 3,250 per tonne
from Rs. 5,200 per tonne effective June 16, 2024.

However, the Special Additional Excise Duty (SAED) on export of diesel, petrol and jet fuel or ATF has been
retained at nil.

India initially introduced the windfall tax in July 2022 in response to the escalating price of crude oil. This
tax is imposed by governments when an industry unexpectedly generates substantial profits, typically
attributed to an unprecedented event. A windfall tax is imposed on domestically produced crude oil when
the rates of the global benchmark exceed $75 per barrel. For the export of diesel, aviation turbine fuel
(ATF), and petrol, the levy is applicable when the product cracks, or margins, surpass $20 per barrel.

Shri Hardeep Singh Puri takes Charge as Minister of Petroleum and Natural Gas

Shri Hardeep Singh Puri has officially taken charge as the Minister of Petroleum and Natural Gas.

After taking charge as Minister of Petroleum and Natural Gas, Shri Hardeep Singh Puri said that India
under the visionary leadership of Prime Minister Shri Narendra Modi successfully navigated the energy
trilemma of energy availability, affordability and sustainability while nations in our neighbourhood and
even developed countries struggled with energy rationing, pump dry-outs and spiralling fuel prices. India
is perhaps the only country in the world where fuel prices have come down over a two- and half-year
reference period.

The Minister said “in 2014, our LPG connections numbered only 14 crores and only 55% population had
access to LPG cylinders and now they have reached 32 crore and all mothers & sisters now have access to
LPG as our Ujjwala scheme has been very successful.”

Speaking about Exploration and Production, Shri Puri said that Oil production from the 98/2 well will
increase to 45,000 barrels per day very soon and gas production will also start soon. “For western offshore,
ONGC has already floated a tender to get an international technology partner. All international oil and gas
majors having an annual revenue above 75 billion USD have been invited to participate in this tender.”,
he noted.

Reiterating government’s commitment to achieve 20% ethanol blending target by 2025, the Minister said,
“in the month of May only, we were able to cross 15% of ethanol blending.” He further added, “As you
know, the Prime Minister had set a target originally of 20 percent blending by 2030. On the basis of what
I have seen and in the basis of work in progress, I am reasonably confident that the 20% blending target,
which was brought forward from 2030 to 2025, will be completed by the year 2025.”

JUNE 2024 Page | 40