The crude oil being produced by Cairn India at Barmer, Rajasthan is finding few takers in the domestic market, although the company has had enquiries from South-East Asian refineries.
Cairn India’s CEO, Rahul Dhir, has written to the petroleum ministry seeking unfettered marketing right to sell the Rajasthan crude to domestic and international buyers. He wrote on September 24 that “there is a significant high value demand from refineries in Singapore, Malaysia, Taiwan and Korea, which can absorb large volumes of Rajasthan crude at a fair price.”
Most PSU oil firms — IOC, HPCL, BPCL and MRPL — expressed inability to accept the produce, as their refineries are not capable of processing the crude due to its waxiness.
And for those which can do so, find the distance from Rajasthan a constraint.
“Processing of Cairn’s crude can be done at refineries having coker units,” commented a senior IOC official. “As we have limited refineries with cokers, a cost of anywhere between Rs 300 crore to Rs 2,000 crore would be required to upgrade our refineries.”
The petroleum ministry has permitted Cairn India to sell its crude to private refiners like RIL and Essar Oil. It has also said that “the matter (of permitting exports) may be taken up with the ministry of commerce, should the contingency arise,” in a communication dated October 8 to the CEOs of oil PSUs, a copy of which is available with the Hindustan Times.
If this happens, it will be for the first time that crude oil produced in India is exported.
A Cairn official confirmed that the company has been given permission to sell crude to private refiners, but refused to comment on the exports issue.