India cuts 1H June windfall tax on crude output by 9pc

Market: Crude oil
03/06/24

India has reduced its windfall tax on domestic crude production by 9pc from mid-May to 5,200 rupees/t ($8.50/bl) in line with a fall in international prices, marking the third consecutive cut since early May.

The new rate took effect on 1 June, according to a government notice. The rate was last revised on 16 May. It is revised every two weeks.

Crude prices fell by over 2pc between 16 May and 1 June, leading to the windfall tax cut.

There was no change in the excise duty on exports of gasoline, diesel and jet fuel, which remained at zero.

The Indian government first imposed the windfall tax in July 2022 because a sharp increase in crude prices then led to domestic crude producers making windfall gains. Indian producers sell crude to domestic refineries at international parity prices.

India's crude production fell by 2pc on the year to 535,000 b/d during January-April, according to latest oil ministry data. The country recently sought bids for two discovered small oil and gas fields in the Mumbai offshore region. Bid rounds for discovered small fields were launched in 2016 to boost domestic oil and gas production and reduce India's import dependency.

Delhi has also extended a deadline for submitting bids for 28 upstream blocks in the ninth Open Acreage Licensing Programme (OALP) bidding round to 15 July. The OALP was introduced in 2017 to attract oil and gas firms to develop India's upstream sector.

By Roshni Devi

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