IOC starts buying Cairn's Rajasthan crude oil

State-owned Indian Oil Corporation has started buying crude oil from Cairn India's Rajasthan oil fields, which have now crossed the 1,00,000 barrels per day mark in production.

"We started taking Cairn crude this week," a senior IOC official said. "We are taking small volumes initially."

Cairn's Mangala oil fields in Barmer district of Rajasthan is producing 105,000 barrels per day (bpd) and is likely to reach peak output of 1,25,000 bpd later this month.

"We were to start taking Cairn crude last month but that had to be postponed due to technical issues with our pipeline," he said.

IOC is buying 13,000 bpd, the official said.

Cairn currently sells crude oil to Reliance Industries' Jamnagar refinery in Gujarat and neighbouring Vadinar plant of Essar Oil.

Mangalore Refinery and Petrochemicals, Cairn's first customer, has temporarily stopped taking the Mangala crude to do more studies on optimal volumes its modern refinery on the west coast can take.

The official said IOC will buy 0.9 million tonne of Mangala crude annually for processing at its Panipat refinery in Haryana.

Cairn transports Mangala crude through a newly built pipeline from Barmer in Rajasthan to Salaya in Gujarat. From Salaya, crude is supplied to RIL's Jamnagar unit and Essar's Vadinar refinery.

Mangala crude is being pumped into IOC's 1,174-km long Mundra-Panipat pipeline for transportation to Panipat.

IOC has also contracted 0.6 million tonne (MT) of Mangala crude oil for processing at its Koyali refinery in Gujarat but the supplies to the unit would commence only in October or November, the official said.

Essar Oil has signed up for 30,000 bpd of Mangala crude for processing at its Vadinar refinery in Gujarat and has started that it can take up to 40,000 bpd.

RIL buys 75,000 bpd of Mangala crude.

Before the commissioning of the pipeline, Cairn shipped crude oil from the nation's most prolific on-land oilfield via road trucks to the Gujarat coast for onward transport to MRPL and Jamnagar refinery of RIL.

Mangala, the largest among 24 oil and gas finds Cairn has made in Thar desert, began production in August 2009. Though the field's approved peak production is 125,000 bpd, Cairn is confident it can do 150,000 bpd.

The Mangala field, which was discovered in January 2004, is the largest onshore oil discovery in India in more than 20 years.