Indian Oil to Seek Concessions for Buying Rajasthan Crude
by Asia Pulse Pte Ltd
January 31, 2007
Indian Oil Corp plans to seek "heavy discounts" from Cairn India for buying its Rajasthan crude oil to make processing the waxy crude at the Panipat or Gujarat refineries economically viable.
"Cairn's Rajasthan crude oil can be currently processed at
our Panipat and Barauni refinery. Our Gujarat refinery will
also acquire capability to process such a crude oil by 2009,"
said IOC director (refineries) B N Bankapur.
"But processing the Rajasthan crude that has a very high
pour point and viscousity with 70-75 percent heavy ends can
only be economically viable only if heavy discounts are
extended," he said.
"The Rajasthan crude can be processed at refineries which
have coker. Currently, our 12 million tons a year Panipat
refinery in Haryana and Barauni refinery in Bihar have coker
and we are installing one at Gujarat refinery by 2009 (when
Cairn expects to being production from Rajasthan)," he said.
Bankapur said IOC can take the crude at a port in Gujarat,
up to which Cairn and its partner Oil and Natural Gas Corp
(ONGC) will have to construct a pipeline, and ship it across to
Haldia from where it can be pumped to Barauni.
"IOC (which originally was the government-appointed nominee
for buying Cairn crude) withdrew from buying Rajasthan crude
because it did not make economic sense to process such a crude.
It is a risky proposition and unless huge discounts are given
no one will be willing to take such risks," he said.
Cairn is ready to start production in small quantities from
its Saraswati field and it waiting for finalizing of oil sales.
In another 12-months, it can put Raageshwari oil field to
production but the giant Mangala field would come in 2009 when
output peaks to 150,000 barrels per day.
Besides IOC, potential customers of Cairn crude include
Reliance Industries and Essar Oil, who have refineries in
(C) 2007 Asia Pulse Pte Ltd.