In a first, Oil And Natural Gas Corporation (ONGC) on Thursday said it has inked a term contract with public sector unit Bharat Petroleum Corporation (BPCL) for the sale of its crude oil produced from Mumbai region.

This is the first contract after the Ministry of Petroleum and Natural Gas granted marketing and pricing freedom for domestically produced crude oil, replacing the previous allocation mechanism.

“ONGC has entered into a term contract with BPCL for the sale of crude oil from the Mumbai region, cementing the strong partnership between the two esteemed companies,” ONGC said.

Under the new marketing regime, ONGC has successfully initiated the first e-auction of Mumbai Offshore crude oil, it added.

BPCL Mumbai refinery has a longstanding association with ONGC, processing its crude oil since 1976. With the advantage of a pipeline connection, BPCL offers seamless logistical operations for ONGC.

As the energy market dynamics continue to evolve, ONGC says, it remains steadfast in pursuit of innovation and excellence, reinforcing its position as a key player in India’s oil and gas industry.

Domestic crude oil output

In June 2022, the government gave exploration and production (E&P) companies the freedom to sell crude oil produced domestically to any company within the country, including PSU refiners, from October 1 this year.

Earlier, the petroleum ministry had decided on how much crude oil was to be allocated to a producer. The development is expected to not only shore up government revenues, but also boost realisation from crude oil produced by ONGC and Oil India.

It will also allow private firms like Vedanta to sell crude to any company offering the best price through auction. Besides, private refiners such as Reliance Industries and Nayara Energy can also procure crude from E&P firms.

To shore up revenues and output from the domestic E&P sector, the government has introduced reforms such as pricing and marketing freedom for gas, discovery of gas price through competitive e-bidding process, revenue-sharing contracts under the Hydrocarbon Exploration Licensing Policy (HELP), and so on.