The Hindu Business Line : Cairn consortium block — ONGC combine beats HPCL for crude oil purchase

IN a close contest ONGC and its subsidiary Mangalore Refinery and Petrochemicals Ltd (MRPL) have beaten Hindustan Petroleum Corporation Ltd (HPCL) for being nominated by the Ministry of Petroleum & Natural Gas to get crude from Rajasthan oil fields.

HPCL was seen as the front-runner to be designated as the Government nominee for purchase of crude oil under the production-sharing contract (PSC) for the Cairn Energy consortium block in Rajasthan, as the technical committee constituted by the Ministry to examine the bids is understood to have recommended HPCL.

Subsequent to the oil discoveries made by the Cairn Energy consortium in Barmer district of Rajasthan, one of the bidders, ONGC, through its subsidiary MRPL, had shown interest in setting up a refinery with a capacity of 7.5 million tonnes per annum. The other two bidders Indian Oil Corporation Ltd (IOC) and HPCL had also shown interest in setting up a wellhead refinery in Rajasthan.

The Ministry had asked the players to submit their proposals by June 30. Any investment plan for a refinery can be firmed up only after the Government designated its nominee. According to sources, the reason stated by the technical committee for recommending HPCL was the marketing network that it enjoys and the rights-of-use (RoUs) for the pipeline, which it has. ONGC has a 30 per cent stake in Cairn Energy's Rajasthan oilfields. Further, HPCL was making a claim to set up a refinery in Rajasthan, as it has plans for one in Punjab. It also said that a refinery by either IOC or ONGC-Cairn would dampen the prospects of its Bhatinda refinery.

The Cairn Energy consortium hopes to begin production from mid-2006, sources said. One of the largest onshore oil discoveries in the last 25 years, the operator of the block RJ-ON-90/1 is the Scottish exploring company, Cairn Energy. According to ONGC, this development augurs well for it. The company is optimistic that a favourable decision will soon be taken on the 7.5 mt wellhead refinery to be set up at Barmer to process this crude, jointly by ONGC and Cairn.

Cairn Energy has made 12 oil discoveries in block RJ-ON-90/1 in Rajasthan. The total in-place reserve estimates for the four oil discoveries declared commercial are about 1.2 billion barrels. The remaining eight discoveries were under evaluation. The operator has indicated a potential of 2.5 billion barrels from these discoveries.

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