RIL receives first consignment of Cairn crude oil

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Reliance Industries ' (RIL) refinery at Jamnagar, Gujarat, received its first consignment of Cairn India 's Rajasthan crude oil over the weekend. The first consignment was dispatched on Saturday.

Reliance is to get seven such consignments totalling about 1.5 million barrels a day (each parcel of about 209,000 barrels).

Sources close to the development told Business Line, "After delivering two consignments to one of the Government nominees Mangalore Refinery and Petrochemicals (MRPL), Cairn has now delivered its first consignment to RIL."

According to sources, the implied price realisation represents an average 10-15 per cent discount on Brent on the basis of prices prevailing for the six months to September 2009. For the last fortnight of October, Brent averaged at USD 75 a barrel.

Early this month Cairn had reached an initial agreement for crude supplies from the Mangala field in Barmer, Rajasthan, to RIL. This agreement is pursuant to the Government approval of allowing private refiners to qualify as additional offtakers of the Rajasthan crude.

The crude oil has been delivered to RIL's Jamnagar refinery through heated crude oil tankers shipped from Kandla Port to Jamnagar. As in the case of Government nominees, IOC and MRPL, the commercial terms including the price for the initial offtake of the Rajasthan crude have been concluded with RIL. Meanwhile, Cairn has requested the Government to nominate additional offtake arrangements and discussions with other private refiners are in progress.

According to reports, RIL imported about 1.279 million bpd crude in September. Cairn had started crude oil production from RJ-ON-90/1 Block on August 29, and is currently producing around 20,000 barrels a day.

Cairn has designed the Mangala Processing Terminal (MPT) to process crude before evacuating for sale to Government nominees and private refiners. The MPT will process crude from the Mangala, Bhagyam and Aishwariya fields - collectively known as the MBA fields. The MPT is designed to process 205,000 barrels a day of crude with scope for further expansion.

Taken from Business Line