Companies

Reliance, Essar, IOC to buy Cairn crude oil this fiscal

| | Updated on: Apr 17, 2011
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IOC will be buying about 25,000-30,000 barrels a day of Rajasthan crude oil Reliance is estimated to buy close to 60,000-70,000 barrels a day Essar will buy about 30,000 barrels daily.

Cairn India has tied up Rajasthan oil fields' crude sales for the current fiscal with Indian Oil Corporation, Reliance Industries Ltd, and Essar Oil.

The crude oil will be sold to the refiners at an average 10-15 per cent discount to Brent on the basis of prices prevailing.

Brent average for the last fortnight has been approximately $120 a barrel.

“The sales arrangement for fiscal 2011-12 was recently put in place with the Government nominating IOC to buy the Rajasthan crude oil. The balance will be supplied to private refiners,” a Government official told Business Line .

IOC will be purchasing about 25,000-30,000 barrels a day of Rajasthan crude oil. Reliance is estimated to buy close to 60,000-70,000 barrels a day, while Essar will take about 30,000 barrels daily.

Though the current approved production level of the Rajasthan field is 125,000 barrels of oil per day, the field can produce 150,000 barrels. At present, sales arrangements are in place for 143,000 barrels a day with public sector and private refiners.

“Discussions are on with the Government for further increasing the volume from the Rajasthan block,” a source said adding that, “the Government may review nominating Hindustan Petroleum Corporation once the offshore loading facility is completed in Bhogat, Gujarat. The work on the final stretch is delayed due to the obstacles created by local politics in Jamnagar.”

The Government is likely to nominate Mangalore Refinery and Petrochemicals for lifting the Barmer crude oil in 2012-13 once the refinery's coker unit is completed, the source added. Cairn sells all its crude oil through the pipeline network.

On crude oil pricing, an industry source pointed out that, “The buoyant crude oil prices and the widening spread between the heavy and the light crude could potentially drive the discount levels to the higher end of the discount range.”

Since the start of crude oil production from Rajasthan, revenues for the stakeholders has clocked over $2 billion.

Published on April 22, 2011

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