ONGC gets better oil prices under new rules

Oil and Natural Gas Corp sold oil through a three-month local tender for the first time, commanding $5-$8 per barrel more than existing rates under new rules that enable producers’ marketing freedom, according to industry sources. According to the report, ONGC, the country’s leading oil explorer, accepted bids at that level through an auction of light sweet oil from its western offshore field, which included supplies from the country’s famous Mumbai High oilfield.

In June, India repealed a provision requiring oil from blocks given before 1999 to be sold to government-nominated clients, primarily state refiners. As a result, producers like ONGC and Oil India frequently sold oil from those blocks at below-market prices. According to a tender document obtained by Reuters, ONGC had offered 33 lots of 4,12,500 barrels each – 26 cargoes from Uran and seven cargoes from Mumbai offshore – for sale beginning November 1 at a minimum 50-cent premium over the average monthly price of Brent.

Western offshore assets, comprising the Mumbai High fields, account for over 70% of ONGC’s yearly output of nearly 20 million tonnes, or approximately 4,00,000 barrels per day. According to sources, all of the cargoes were sold to state refiners save one, which was handed to Reliance Industries Ltd. State refiner Hindustan Petroleum purchased 15 cargoes, Mangalore Refinery and Petrochemicals purchased five, and Bharat Petroleum Corp was the top bidder for three.

They claimed that Indian Oil Corp, the country’s largest refiner, received one cargo while its subsidiary Chennai Petroleum Corp received eight. Indian refiners bid $1.80-$1.85 per barrel for cargoes from Uran, where supplies are delivered through the pipeline, $3.8-$6.5 per barrel for offshore cargoes, and roughly $1.55 per barrel for a parcel from the Panna Mukta field. Uran shipments command a lesser premium because local taxes make the crude more expensive than offshore supply.

Leave a Reply

Your email address will not be published. Required fields are marked *