The Hindu Business Line : Govt may name more than one co for lifting Cairn crude

New Delhi April 22 The Government may consider nominating more than one State-owned company for lifting Cairn India Ltd's Rajasthan crude. At a recent meeting convened by the Ministry for Petroleum and Natural Gas to ascertain the status of crude evacuation, the designated Government nominee, Mangalore Refinery and Petrochemicals Ltd (MRPL), is understood to have expressed its inability to lift the entire produce from the fields at present.

Inability

The reason cited by MRPL was that with its present refinery configuration, the company was not in a position to lift the whole produce from the field as it requires blending with lighter oil to make it acceptable for processing.

Cairn and its partner ONGC have been trying to work out a mechanism to evacuate crude from Barmer in Rajasthan, which will start flowing from 2009. Cairn at the meeting is understood to have referred to the three applications made by it regarding reference of price to a sole expert, granting right of user to Cairn Energy for laying pipelines, and cost recovery of pipeline.

Nominees

Sources told Business Line that it was felt that to address these issues, the status of the present Government nominee needs to be ascertained and also the specific point of disagreement on price needs to be known.

The Ministry has asked MRPL to confirm the exact quantity that it can lift and progress made on the price to be paid for evacuation. MRPL had indicated that at present it can lift only up to 1.2 million tonnes (mmt) of crude and the balance could be lifted only when its existing allocation of the Mumbai High crude is increased to 7 mt.

Otherwise, the refinery configuration would require modification involving additional costs, MRPL has said.

Hence, it emerged that in order to balance the crude, Government may have to nominate other nominees as well. It was felt that if MRPL is not going to be the sole nominee, the task of assigning pipeline construction to just one agency becomes open, sources said.

Meanwhile, Cairn was asked by the Ministry to approach its operating committee with a proposal for the proposed evacuation plan including a detailed cost benefit analysis of shifting the delivery point, along with impact on Government take and profit to the contractor (Cairn) in alternative scenarios.

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