The Hindu Business Line : For Kakinada, Barmer refinery projects — ONGC in talks with oil majors for long-term crude supply

OIL and Natural Gas Corporation (ONGC), which is looking for possible partners to ensure long-term crude supply for its refinery projects, is in talks with major players including Saudi Aramco.

The company would require close to 50 million tonne of crude oil once its refinery projects in Andhra Pradesh and Rajasthan, the expansion plans of Mangalore Refinery and a greenfield project in Mangalore go on stream.

Sources said, once the feasibility study for the 7.5-million-tonne-per-annum Kakinada refinery project in Andhra Pradesh is completed, the company would be looking at the possible long-term tie-ups with crude suppliers, which would offer assured crude supply at good price.

The company is not only looking at Saudi Aramco, world's largest oil producer, but other possible partners as well, sources told Business Line.

India currently imports 24 million tonne of crude oil from Saudi Arabia.

Asked whether the company was also weighing the possibility of offering equity participation to the crude suppliers in its refinery projects, sources said talks were at a preliminary stage. Besides, setting up the refinery was not the issue before the company, sources said adding that at present, ONGC was more interested in partners for long-term crude supply.

Speculations are that ONGC is planning to rope in Saudi Aramco as its equity partner for the Kakinada refinery project. ONGC is said to have also offered marketing rights for retailing petroleum products in India to the extent of Saudi Aramco's equity participation in the refinery project.

The Kakinada refinery project, expected to cost Rs 5,500 crore, would produce oil in compliance with the latest emission norms and would be the first project in the world to have the capability to process bio-fuels from the ground up.

As regards scouting for equity partner for its refinery project in Barmer, Rajasthan, sources said the company has already given a letter along with its joint venture partner in the block, Cairn Energy, to the Petroleum Ministry, that Cairn was supportive of ONGC's approach for developing the field.

However, indications are that Cairn, which is not into downstream business, is yet to decide whether it would like to become a partner for setting up a refinery in Rajasthan.

ONGC and its subsidiary Mangalore Refinery and Petrochemicals Ltd have been nominated by the Ministry to get the crude from fields in the Barmer district of Rajasthan.