The Hindu Business Line : ONGC wants to sell oil from Panna-Mukta fields to MRPL

Other details
IndianOil has not been paying storage tanker costs.
If the Ministry agrees, then the JV partners can sell their share of crude oil to anyone.

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New Delhi Feb. 6 ONGC is using its persuasive skills to convince its other joint venture partners in the Panna, Mukta and Tapti (PMT) oil and gas fields to consider switching the sale of produce from these fields to Mangalore Refinery and Petrochemicals Ltd (MRPL), instead of Indian Oil Corporation Ltd (IndianOil).

According to sources, the joint venture partners — BG, ONGC and Reliance Industries Ltd — are trying to resolve certain outstanding issues with the Government nominee, IndianOil, which have led to loss of revenue for them.

While response for IndianOil is still awaited, ONGC has been actively pursuing with the other joint venture partners to mull over the higher commercial proposal offered by MRPL and consider selling the produce to it. Sources, however, declined to give the amount, which MRPL, a subsidiary of ONGC, was willing to offer. A deliberation on the commercial viability of selling the produce to MRPL is going on, it said.

"Once the joint venture partners agree for this commercial move, the matter would be taken up with the Government," the sources told Business Line. Some of the issues to be resolved with IndianOil include payment of storage tanker cost, which IndianOil has not been paying. The sources said the partners want MRPL to pick up the cost of storage tankers unpaid by IndianOil.

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.

If the joint venture partners agree, they would approach the Government to withdraw IndianOil as Government nominee for sale of oil from the fields, the sources said. 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 to. 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.

Asked how the move would benefit MRPL, the sources said, 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.

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