ONGC may get nod to auction Mumbai High crude
The Government is likely to allow the Oil and Natural Gas Corp (ONGC) to auction its entire crude oil output from Mumbai High fields, India's largest oilfield, to state-run refineries, a top official said.
"The new mechanism is likely to be introduced over the next three months," he said.
At present, the 16 million tonnes of Mumbai High crude is apportioned to Indian Oil Corp, Hindustan Petroleum and Bharat Petroleum each year with price tagged to the Nigerian Bonny Light but allowing discounts of $1.5 a barrel plus concessions on customs duty, sales tax and sea freight.
The auction mechanism, a long-standing demand of ONGC, would fetch ONGC at least $6 more per barrel or close to $720 million annually with refiners outbidding each other for the premium crude, the official said.
In a separate move, the Oil Ministry plans to disband the Empowered Steering Committee that approves import of crude oil and petroleum products on behalf of the state-run oil firms.
The plan is to hand over the entire imports business to the oil companies since refining and marketing operations are now out of government control. Also, there is competition between these companies to source crude from cheaper destinations given the high international prices.
During the control regime, the ESC -- comprising senior officials of External Affairs, Finance, Commerce and Petroleum as well as IOC -- met every Friday to approve oil and product imports that was canalised through IOC to gain economies of scale.
With oil marketing companies fighting for domestic market share, there has been a rush to improve refining margins through crude purchases, the official said.