New Delhi

Oil and Natural Gas Corp, for the first time, sold oil through a three-month local tender, commanding $5-$8 per barrel more than existing rates under new rules that allow producers marketing freedom, industry sources said.

ONGC, the country's top oil explorer, accepted bids at that level through auction of light sweet oil from its western offshore field, including supplies from the country's flagship Mumbai High fields, they said.

In June, India abolished a rule that said oil from blocks awarded prior to 1999 must be sold to government-nominated customers, mostly state refiners. That meant producers such as ONGC and Oil India often sold oil from those blocks at below market rates.

ONGC had offered 33 lots of 4,12,500 barrels each - 26 cargoes from Uran and seven cargoes from Mumbai offshore - for sale starting November 1 at minimum 50-cent premium over the average monthly price of Brent, according to a tender document seen by Reuters.

Western offshore assets, including the Mumbai High fields, account for about 70 per cent of ONGC's annual output of nearly 20 million tonnes, or roughly 4,00,000 bpd.

All the cargoes were sold to state refiners except one, which was awarded to Reliance Industries Ltd, sources said.

State refinerHindustan Petroleum bought 15 cargoes; Mangalore Refinery and Petrochemicalsbought five; and Bharat Petroleum Corp was the highest bidder for three, the sources said.

Indian Oil Corp, the country's top refiner, got one cargo while its subsidiaryChennai Petroleum Corp was awarded eight, they added.

Indian refiners bid to pay a premium of $1.80-$1.85 per barrel for cargoes from Uran, where supplies come through a pipeline, $3.8-$6.5 per barrel for offshore cargoes and about $1.55 per barrel for a parcel from Panna Mukta field, they said.

Uran cargoes fetch a lower premium as local levies make the crude costlier than offshore supplies.

Sources said ONGC hopes to get better participation in subsequent tenders.

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