RIL becomes 1st private firm to buy Cairn crude

Mukesh AmbaniMukesh Ambani's Reliance Industries Ltd is going to be the first private refiner in the country to process domestic crude, with the company entering into an initial agreement to buy oil from Cairn's fields at Barmer in Rajasthan. The deal comes within a week of the UK

explorer's Indian arm getting government nod to sell crude to private refiners.

Though Cairn did not disclose the volumes agreed upon, sources said the company will sell seven parcels of 200,000 barrels each, totalling 1.4 million barrels, this year. Crude will be transported in heated trucks and the first parcel will reach Reliance's Jamnagar refining complex by the third week of November.

Relinace will pay the same price as agreed between Cairn and government-nominated buyers such as ONGC subsidiary MRPL, IndianOil and Hindustan Petroleum. "The implied price realisation represents an average 10-15% discount to Brent (crude) on the basis of prices prevailing for the six months to September 2009," Cairn said in a statement on Wednesday.

This will be the first time that crude oil from a domestic field will be sold to a private refiner. So far, all crude produced in the country is consumed by state refiners. The government last week allowed such sales since state-run refiners said they were unable to consume the entire output.

Cairn also wants the government to allow it to export the crude to southeast Asian refineries so that a proper pricing for Rajasthan crude is discovered. But the government has so far not agreed to this proposal.

Source: http://economictimes.indiatimes.com/articleshow/5198222.cms

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