ONGC not to sell crude oil to private refiners

Nov 21, 2003 01:00 AM

Upstream oil major Oil and Natural Gas Corporation (ONGC) will not sell its crude oil to private sector refiners, such as Reliance Industries, during 2004-05 as well. The company will continue to supply its 26.2 mm ton of crude only to public sector refiners.
This was decided at a high-level meeting convened by petroleum secretary B.K. Chaturvedi to decide on crude allocation for 2004-05. The meeting was attended by CEOs of all the state-run oil companies.

"The meeting decided that ONGC will continue to sell its crude oil only to public sector refiners such as Indian Oil Corporation, Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corporation Ltd next financial year," Chaturvedi said.
Chaturvedi said, "Refineries of most of the public sector firms have been designed keeping in mind the processing of sweet and light crude of Mumbai High. Therefore, it was decided to continue the supply of this crude to them. The Reliance Industries’ refinery is versatile and could process a wide range of crude."

Chaturvedi said the quantity of crude to be supplied to each refinery and the price to be paid for that crude would be worked out later between ONGC and the buyers. ONGC had entered into a two-year contract in April 2002 to supply 26.2 mm ton of its crude to the three oil PSUs. However, it is free to sell any incremental production over and above this to any refiner on best-price basis.
Chaturvedi said that during 2004-05, 1.5 mm ton of Ravva crude oil would continue to be supplied to Bongaigaon Refinery and Petrochemicals.

At the meeting, the three state-run refining and marketing companies had opposed ONGC’s plans to invite bids for its crude from next financial year. They said that most of their refineries are designed to perform and operate on domestic crude and it would be difficult to work with other crudes if their allocations were reduced.
On the other hand, ONGC said the Mumbai High crude is of high quality and is more suited for the production of light distillates suchas petrol and aviation turbine fuel (ATF) and should therefore fetch the “best price”.

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