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| RIL close to buying crude oil from Cairn |
| Press Trust of India / New Delhi Nov 04, 2009, 15:03 IST |
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 Reliance Industries (RIL) is close to striking a deal to buy crude oil from Cairn India's prolific Rajasthan oil fields and the first parcel may reach its Jamnagar refineries by the fourth week of November.
Since the time government allowed Cairn to sell crude oil from its Rajasthan fields to private firms, it has been in dialogue with RIL, an industry source said.
A deal to sell seven parcels of 200,000 barrels each (cumulative 1.4 million barrels or 0.2 million tonnes) this year is about to be concluded, the source said.
The oil will be shipped in trucks from the Barmer district fields to the twin refineries of RIL in neighbouring state of Gujarat.
The first parcel may be sold as early as November 20, the source said.
Spokespersons of both RIL and Cairn were not immediately available for comments.
Cairn is being forced to sell oil to private firms after the three public sector companies nominated to buy Rajasthan crude refused to take the entire output from the fields.
This will be the first time ever that crude oil from a domestic field will be sold to a private refiner. So far, all the crude oil that is produced in India is consumed by PSU refiners.
The source said RIL will pay the same as the one agreed between Cairn and government-nominated buyers MRPL, IOC and HPCL.
Cairn, last week, stated that the government has agreed for private refiners as additional offtakers of Rajasthan crude.
The government had previously nominated Indian Oil, Hindustan Petroleum and Mangalore Refinery and Petrochemicals for buying Rajasthan crude. But the three together have agreed to buy less than half of the targeted production this year.
The three refiners have committed to taking 0.7 million tonnes of output during the remainder part of the current fiscal and 2.4 million tonnes in the next year. But so far only MRPL has bought two parcels. HPCL had deterred while IOC says it can take crude only when a pipeline from Barmer to Gujarat coast for transporting the oil is build by early next year.
The source said Cairn has also opened dialogue with Ruias-owned Essar Oil for selling Rajasthan crude.
Reliance and Essar have previously expressed interest in buying Cairn crude. Reliance wants 30,000 to 60,000 barrels per day (1.5-3 million tonnes) of Cairn crude each for its two refineries at Jamnagar in Gujarat, while Essar has written for 30,000 bpd this year and 120,000 bpd (6 million tonnes) by 2011 when it expands its Vadinar refinery.
IOC and MRPL have committed to 0.20 million tonnes each in 2009-10, while HPCL proposed to buy 0.30 million tonnes of Rajasthan crude.
In 2010-11, IOC would buy 1.5 million tonnes of the crude oil from the nation’s most prolific oil discovery in more than two decades, while MRPL would double its offtake to 0.40 million tonnes. HPCL would take 0.50 million tonnes next fiscal.
Cairn is producing about 10,000 barrels of oil per day from Rajasthan. It has so far drilled 36 wells, of which four are currently producing. The first processing train of 30,000 barrels per day (1.5 million tonnes) is ready and output can reach that level by the year-end, the company stated last week.
Rajasthan is the largest onland oilfield discovered in more than two decades and will have a peak output of 8.75 million tonnes, contributing one-fifth of the nation’s current oil production.
Cairn India’s Rajasthan oil fields will bring down India’s oil import bill by $6.8 billion or 7 per cent, Goldman Sachs said adding peak output from the fields was likely to be 190,000 bpd (9.5 million tonnes a year) against 175,000 bpd forecast by the company.
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