• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest
• The New Manager

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Richa Mishra

`To put an end to pricing fears'

Advertisement

New Delhi Feb. 16 In a bid to resolve the imbroglio around crude sales from Cairn India's Rajasthan fields, the company has proposed to the Petroleum Ministry that an international expert could be commissioned to benchmark its crude, based on which it would offer the produce to potential buyers.

Cairn India has been facing some difficulty in securing PSU buyers for its Rajasthan crude since some of the potential buyers, including Indian Oil Corporation Ltd , have maintained that any commitment from their side on the quantity of crude they would lift would depend on the price offered by Cairn. The company's potential buyers include Bharat Petroleum Corporation, Hindustan Petroleum Corporation, Reliance Industries Ltd and Essar Oil.

Contract details

A senior Cairn official told Business Line that the production sharing contract (PSC) signed with the Central Government requires price to be fixed by references to a basket of f.o.b. (free on board) crude adjusted for differences in quality, delivery time, quantity and payment terms.

If an independent expert is appointed to determine the appropriate benchmarks and adjustments, it would put to an end all speculation on the product quality as well as the price offered by Cairn, he said. Besides, the Indian refiners would benefit on account of assured supply as well as lower transportation costs compared with imports, he added.

Quality of produce

As regards the quality of the produce from Rajasthan fields, the official said crude oils have a vast array of properties and there are various definitions for light and heavy oil. The most common oilfield parameter used to define oil density is the API gravity. The US Department of Energy and the World Petroleum Congress define heavy oils as those with densities less than 22.3 degree API and light oils with densities greater than 22.3 degree API.

"Mangala (in Rajasthan fields) is a sweet, low sulphur, and waxy crude with an API gravity of around 27 and pour point just over 40 degrees Celsius. In the BP crude assay database, there are 94 crudes that are considered heavier than the Mangala crude and 31 crudes that are more viscous out of a total of more than 450 crude oils. So although challenging, the properties of Rajasthan crude are not unique," he said.

Cairn expects to begin producing from Rajasthan by 2009. The fields - Mangala, Aishwariya and Bhagyam - have a targeted production of 150,000 barrels of oil per day.

More Stories on : Petroleum | Outlook | Standards & Benchmarks

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
El Nino diminishing; prospects up for La Nina

Copyright © 2007, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line