The Hindu Business Line : Cairn consortium block — HPCL emerges front-runner for crude oil purchase

HINDUSTAN Petroleum Corporation Ltd (HPCL) seems to be emerging as the front-runner to be designated as the Government nominee for purchase of crude oil under the production-sharing contract (PSC) for the Cairn Energy consortium block in Rajasthan.

Based on oil discoveries made by the Cairn Energy consortium in Barmer district of Rajasthan, Oil and Natural Gas Corporation (ONGC), through its subsidiary Mangalore Refinery Petrochemicals Ltd (MRPL), had shown interest in setting up a refinery with a capacity of 7.5 million metric tonnes per annum, while Indian Oil Corporation Ltd (IOC) and HPCL had shown interest in setting up a wellhead refinery in Rajasthan, official sources said.

The Ministry of Petroleum and Natural Gas had asked the players to submit their proposals by June 30. The Government had to choose from the three bidders. The companies have approached the Government to designate them as its nominees for purchase of crude oil. Any investment plan for a refinery can be firmed up only after the Government designated its nominee.

The Cairn Energy consortium hoped to begin production from mid-2006, sources said. ONGC has a 30 per cent stake in Cairn Energy's Rajasthan oilfields.

ONGC, through its subsidiary, MRPL, and Cairn Energy of UK want to set up a refinery in Barmer district. On the other hand, IOC is claiming rights over the crude produced from the Cairn fields in Rajasthan, as it is the Government-nominated agency for marketing the crude.

IOC plans to either pipe it to its Panipat refinery in Haryana or set up a wellhead refinery in Rajasthan. HPCL is another claimant to setting up a refinery in Rajasthan, as it has plans for one in Punjab. It also said that a refinery by either IOC or ONGC-Cairn would dampen the prospects of its Bhatinda refinery.

Cairn Energy has made 12 oil discoveries in block RJ-ON-90/1 in Rajasthan. The total in-place reserve estimates for the four oil discoveries declared commercial are about 1.2 billion barrels.

The remaining eight discoveries were under evaluation. The operator has indicated a potential of 2.5 billion barrels from these discoveries.

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