IndianOil to buy oil from Cairn at discount
Guwahati   31-May-2009
IndianOil yesterday said it will buy 0.2 million tonnes of crude oil from Cairn India’s Rajasthan oilfields this year at 11-12 per cent discount to Nigerian Bonny Light crude oil price. “We have reached an agreement on pricing with Cairn,” IndianOil Director (Refineries) Mr. B.N. Bankapur said. The pricing agreement is subject to approval by IndianOil Board, he said, adding the company would buy crude from Cairn only if the other buyers; state-run Hindustan Petroleum and Mangalore Refinery and prospective private buyers like Essar Oil and Reliance Industries are also sold the crude at a price not lower than the rates agreed. Rajasthan crude would be sold at a discount to Nigerian Bonny Light crude. The discount would be the difference in Gross Product Worth (GPW) between the premium Bonny Light and crude from Mangala field in Rajasthan. On top of it, a 2.14 per cent concession would be allowed for higher pour point and viscosity of Cairn crude. GPW is the fuel a particular grade of crude can produce. Bankapur said the discount works out to 11-12 per cent at current oil prices. It would be 18 per cent if three-year average of Bonny Light price is taken, 15 per cent at one year average and 16 per cent at six-month average.