The Hindu Business Line : Cairn inks pact with RIL for crude supply

New Delhi, Nov. 4 Cairn India has reached initial agreement for crude supplies from the Mangala field in Barmer, Rajasthan, to private sector refiner Reliance Industries Ltd (RIL). Official sources told Business Line that Reliance is likely to get six-seven consignments totalling about 1.92 million barrels/ day.

The supplies are expected to begin in a fortnight, sources said. As regards pricing of the crude, Cairn said, the implied price realisation represents an average 10-15 per cent discount to Brent on the basis of prices prevailing for the six months to September 2009. For the last fortnight of October, Brent averaged at $ 76.2 a barrel.

In a statement, Cairn said the crude oil from the Mangala fields will be supplied to RIL’s refinery in Jamnagar, Gujarat. This agreement is pursuant to the Government approval of allowing private refiners to qualify as additional offtakers of the Rajasthan crude.

The crude oil will be delivered to RIL’s Jamnagar refinery through heated crude oil tankers. As in the case of Government nominees, IOC (Indian Oil Corporation) and MRPL (Mangalore Refinery and Petrochemicals Ltd), the commercial terms including the price for the initial offtake of the Rajasthan crude have been concluded with RIL, the company said.

Meanwhile, Cairn has requested the Government to nominate additional offtake arrangements and discussions with other private refiners are in progress.

Cairn had started crude oil production from RJ-ON-90/1 Block on August 29, and is producing around 12,000 barrels a day. Cairn had sold the first cargo of 209,000 barrels to MRPL last month and it will deliver two more cargoes this month.

Cairn has designed the Mangala Processing Terminal (MPT) to process crude before evacuating for sale to Government nominees and private refiners. The MPT will process crude from the Mangala, Bhagyam and Aishwariya fields –collectively known as the MBA fields. The MPT is designed to process 205,000 barrels a day of crude with scope for further expansion.

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