Press Trust of India / New Delhi May 21, 2009, 19:36 IST
Cairn India will sell its Rajasthan crude oil at a discount of about $16 a barrel to the grade of Oil and Natural Gas Corp's Mumbai High crude oil.
Cairn and its first customer Indian Oil Corporation have almost reached an agreement on selling Rajasthan crude at a discount to Nigerian Bonny Light crude oil (the grade to which ONGC's Mumbai High crude is benchmarked), industry sources said.
The discount would be the difference in Gross Product Worth (GPW) between the premium Bonny Light and the Mangala crude of Rajasthan and a 2.14 per cent concession for higher pour point and viscosity of the Cairn crude.
The GPW differential is the variation in products that Mangala crude will produce when compared to premium fuel produced from Bonny Light crude. Mangala crude cannot produce products like LPG and so the GPW differential or discount has been put at around 14 per cent, they said.
Additionally, crude turns solid at normal temperature and is viscious and so a further discount of 2.14 per cent has been given. The final price to IOC would be 16.14 per cent discount to $75 a barrel - the three-year average of Bonny Light cruden, sources added.
The government has found in IOC, Hindustan Petroleum and Mangalore Refinery buyers of only 2.6 million tonnes of the 8.75 million tonnes peak output planned by Cairn India by 2011.
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