Indian upstream company Oil and Natural Gas Corporation (ONGC) will not sell its crude oil to private sector refiners, such as Reliance Industries, from next year. According to a report by Infraline, ONGC will supply its 26.2 million tonnes of crude output only to public oil refiners. This was decided at a high-level meeting convened by petroleum secretary B K Chaturvedi on crude allocation for 2004-05.
The meeting last week was attended by the CEOs of the state-run oil companies.
“The meeting decided that ONGC will continue to sell its crude oil only to public refiners such as Indian Oil Corporation, Hindustan Petroleum Corporation Ltd and Bharat Petroleum Corporation Ltd next financial year,” Mr Chaturvedi said.
He said: “Public refineries have been designed to process 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 can process a wide range of crude.”
He 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.
In April 2002, ONGC signed a two-year contract to supply 26.2 million tonnes of its crude to the three state oil companies. However, it is free to sell any incremental production to any refiner on best-price basis.
Mr Chaturvedi said that during 2004-05, 1.5 million tonne of Ravva crude oil would continue to be supplied to Bongaigaon Refinery and Petrochemicals Ltd.
At 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 operate on domestic crude, it would be difficult to use other crudes if their allocations were reduced.