The Hindu Business Line : Decision soon on selling Panna-Mukta output to MRPL

New Delhi April 21 ONGC, BG, and Reliance Industries Ltd, the joint venture partners in the Panna, Mukta and Tapti oil and gas fields, are likely to take a decision soon on whether to sell the produce from these fields to Mangalore Refinery and Petrochemicals Ltd (MRPL), a subsidiary of ONGC, instead of Indian Oil Corporation Ltd.

"Once the joint venture partners ink an agreement on the issue the Petroleum Ministry would be approached with a proposal to withdraw IOC as Government nominee for sale of oil from fields and nominate MRPL," an official said.

The partners are in the process of circulating the agreement to take a final decision, he told Business Line. With no solution in sight at the moment on resolving the pending commercial issues with the Government nominee (IOC), the joint venture partners have been compelled to take this decision, an official source said.

Stating that the outstanding issues with the Government nominee has resulted in loss of revenue for the joint venture, sources said, pending decisions include the payment of storage tanker cost, which IOC has not been paying.

Besides, MRPL was willing to purchase the produce at a higher price from the fields. The crude is benchmarked to Brent. Indications are that the produce is sold at Brent price minus 10 cents. If MRPL sources crude oil domestically from Panna-Mukta field, the company could save on customs duty expenses vis-à-vis imported crude.

Panna-Mukta field is projected to continue producing crude oil till 2019.

BG-ONGC-RIL produces 40,000 barrels of crude oil per day from Panna-Mukta fields and 5.5 million standard cubic metres per day (MMSCMD) of gas.

The earnings from crude oil alone are $650-$700 million annually. Further, if the Petroleum Ministry agrees to the demands, then the joint venture partners would be free to sell their share of crude oil from the fields to anyone they wish.

The three partners would be entitled to crude oil proportionate to their shareholding — ONGC has 40 per cent interest in the joint venture while BG and RIL have 30 per cent each.

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