News Release Details
Govt asks MRPL, IndianOil & HPCL to negotiate crude price with Cairn
New Delhi 02-Oct-2007
The imbroglio over evacuation of Cairn's Rajasthan crude by MRPL seems to be heading for a resolution. The government has asked nominee MRPL to explore possibility of lifting the crude jointly with IndianOil and HPCL. MRPL has expressed that it could lift a maximum of 1.2 million tones of crude every year where as peak production in the field is estimated at 7.5 MMTPA. It is also learnt that the petroleum ministry has asked the trio MRPL, IndianOil and HPCL—to jointly carry out negotiations for price of the crude with Caim. A company source confirmed "the ministry has directed MRPL, a downstream subsidiary of ONGC, to involve IndianOil and HPCL for lifting the crude oil." The government's direction came at a time when Caini is all set to produce first oil in 2009. Cairn's crude oil price and MRPL's capacity to process the waxy crude are two major issues to be resolved to ensure evacuation of oil from the Rajasthan block. According to official sources, both IndianOil and HPCL would be willing to buy the Rajasthan crude at right price. A right price could not be achieved as public sector oil companies are insisting upon a discount. Sources said that a discount was sought as the crude was stated to be waxy in nature, hence difficult in transporting it from the field to refineries. Construction of a pipeline from the field to a coastal location in Gujarat would, however, strengthen. Cairn's bargaining position. Cairn is unwilling to sell its crude at a discount. As per the agreement between the government and the contractor (the consortium of Cairn and ONGC), Cairn is bound to sell its crude oil from Rajasthan to the government's nominee MRPL at a price agreeable to both the parties. So far, no agreement over pricing could be arrived at and MRPL has expressed inability to lift the entire crude from the field. Other issues; shifting of delivery point (from well-head to another location) and inclusion of pipeline (from the field to a coastal location in Gujarat) is other issues pending government's approval. So far, the government has granted the rights of use (RoU) to Cairn, which allows it to secure access to the land to build the pipeline from Rajas than. It, however, does not mean an automatic approval for the project cost or a nod for shifting the delivery point.
New Delhi 02-Oct-2007
The imbroglio over evacuation of Cairn's Rajasthan crude by MRPL seems to be heading for a resolution. The government has asked nominee MRPL to explore possibility of lifting the crude jointly with IndianOil and HPCL. MRPL has expressed that it could lift a maximum of 1.2 million tones of crude every year where as peak production in the field is estimated at 7.5 MMTPA. It is also learnt that the petroleum ministry has asked the trio MRPL, IndianOil and HPCL—to jointly carry out negotiations for price of the crude with Caim. A company source confirmed "the ministry has directed MRPL, a downstream subsidiary of ONGC, to involve IndianOil and HPCL for lifting the crude oil." The government's direction came at a time when Caini is all set to produce first oil in 2009. Cairn's crude oil price and MRPL's capacity to process the waxy crude are two major issues to be resolved to ensure evacuation of oil from the Rajasthan block. According to official sources, both IndianOil and HPCL would be willing to buy the Rajasthan crude at right price. A right price could not be achieved as public sector oil companies are insisting upon a discount. Sources said that a discount was sought as the crude was stated to be waxy in nature, hence difficult in transporting it from the field to refineries. Construction of a pipeline from the field to a coastal location in Gujarat would, however, strengthen. Cairn's bargaining position. Cairn is unwilling to sell its crude at a discount. As per the agreement between the government and the contractor (the consortium of Cairn and ONGC), Cairn is bound to sell its crude oil from Rajasthan to the government's nominee MRPL at a price agreeable to both the parties. So far, no agreement over pricing could be arrived at and MRPL has expressed inability to lift the entire crude from the field. Other issues; shifting of delivery point (from well-head to another location) and inclusion of pipeline (from the field to a coastal location in Gujarat) is other issues pending government's approval. So far, the government has granted the rights of use (RoU) to Cairn, which allows it to secure access to the land to build the pipeline from Rajas than. It, however, does not mean an automatic approval for the project cost or a nod for shifting the delivery point.