RIL keen on buying Cairn's oil from Rajasthan fields

Reliance Industries is keen on buying Cairn India's Rajasthan crude oil but said it cannot take the oil unless the pipeline from fields to Gujarat coast is built.

RIL wants 30,000 to 60,000 barrels per day of Cairn crude at each of its two refineries at Jamnagar in Gujarat.

"We want Rajasthan crude but have no facility to receive (oil in) tankers," RIL Executive Director P M S Prasad told reporters here.

Cairn, which began crude oil production from its prolific Rajasthan fields on August 29, will transport initial volumes to refiners by trucks and tankers. A pipeline from the Barmer district fields to Gujarat coast will be completed by the year-end.

"We will be willing to take Rajasthan crude once the pipeline is completed," he said.

The government has so far nominated Indian Oil, Hindustan Petroleum and Mangalore Refinery to buy the Rajasthan crude. But the three have committed to lift only a small portion of the 175,000 bpd peak output from the fields, necessitating sale to private refiners.

Essar Oil, the only other private refiner in the country, has also written to the Petroleum Ministry seeking 30,000 bpd of Rajasthan crude this year and 120,000 bpd by 2011 when it expands its Vadinar refinery in Gujarat.

RIL, which has a 660,000 bpd refinery at Jamnagar and recently commissioned a 580,000 bpd only-for-exports refinery adjacent to it, currently buys all of its crude from overseas and Cairn crude would be the first instance of it sourcing the oil domestically.

The company produces about 12,000 bpd of crude oil from its MA field in the predominantly gas-rich KG-D6 block off the Andhra coast, but sells it to Vizag and Chennai refineries.

IOC and MRPL have been allocated 0.20 million tonnes of Rajasthan crude oil each in the remainder of 2009-10 fiscal, while HPCL would offtake 0.30 million tonnes. In 2010-11, IOC would buy 1.5 million tonnes of the crude oil while MRPL would double its offtake to 0.40 million tonnes. HPCL would take 0.50 million tonnes.

Cairn's production from Rajasthan fields will almost match with the offtake this year but in 2010-11 it will produce 1,25,000 bpd (over 6 million tonnes) while the offtake will be only 48,000 bpd.

The company wants the government to allow it to sell crude oil to private refiners.