Seeks $4-5 discount on Rajasthan oil

ONGC has sought a $4-5-a-barrel discount on Cairn Energy’s low grade Rajasthan crude oil, saying without concessions it was uneconomical to transport the oil to its sbusdiary MRPL.

Cairn’s Rajasthan crude had high wax content and needed specialised pipelines with intermittent heating to transport it 400 km from Barmer district to Mundra port in Gujarat for further shipment to Mangalore Refinery for processing.

Sources said Cairn has sought an international price for the 1,50,000 barrels per day Rajasthan crude expected from end-’08, but ONGC says Rs 2,000 crore it plans to sink in the pipeline needs to be compensated through discounts without which its was uneconomical to process Rajasthan oil at MRPL.

Petroleum Ministry, sources said, has supported ONGC’s demand and told Cairn Energy CEO Bill Gammell at a meeting on May 25 unless the British firm gave discounts, the government will ask the company to make its own arrangements to transport the crude from Rajasthan to any port for export .Cairn cannot sell the crude to any other refiner as the Government had appointed ONGC/MRPL as offtakers in India.