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Richa Mishra

London , Sept. 7

Cairn Energy Plc, which is examining all possible options for evacuating oil from the Rajasthan fields, is considering the prospects of marketing of crude oil in India. Cairn and ONGC jointly hold stakes in the Rajasthan oil block. While Cairn has a 70 per cent stake, the remaining 30 per cent is with ONGC.

This proposal, according to sources, follows the recent reports of Oil and Natural Gas Corporation (ONGC) shelving its plans to build a 7.5-million-tonnes per annum well-head refinery in Rajasthan. The refinery was to be built by ONGC's subsidiary MRPL.

Cairn, which was earlier planning to sell its entire Rajasthan crude oil of 1,50,000 barrels to the Government nominee MRPL, may now enter into different sales agreement with various buyers or refiners including Reliance, Essar Oil and Indian Oil Corporation (IOC).

When asked, Sir Bill Gammell, Chief Executive of Cairn Energy, who was in India recently said, "We are looking at various marketing options and are currently engaged in talks with various buyers. Our immediate concern is to evacuate the crude oil as early as possible and bring it to the market."

Under the terms of the production-sharing contract (PSC), Cairn is obliged to sell the crude to the Government of India until the country is self-sufficient and the Government has the right to appoint a nominee to take delivery of the oil.

In September 2005, MRPL was nominated by the Government to purchase the entire crude produced from the block, in accordance with the relevant provisions of the PSC.

If Cairn decides to market the crude then it in effect would mean MRPL is unlikely to continue as the Government's sole nodal agency to lift Cairn's crude from Rajasthan. This would also need changes in the PSC entered into between the Government and Cairn Energy.

Cairn is also working towards enhancing crude oil recovery from its oil fields in Rajasthan from the current 1,50,000 barrels of oil per day to over 2,00,000 in 7-10 years, beginning 2009 when production of oil from the field begins, Sir Bill said.

As per reports, Cairn's crude is highly viscous besides having a high wax content and needs specialised pipelines to transport it from Barmer, Rajasthan to a possible location at Mundra port in Gujarat for further shipment to various refineries for processing.

Related Stories:
Cairn Energy to float IPO by March
ONGC, Cairn told to end sales dispute

More Stories on : Petroleum | Strategy | Outlook

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