Indian Oil Corporation (IOC), which owns 10 of the 19 refineries in India with a total crude processing capacity of around 60 million tonne per annum, said it may buy around 2 million tonne of Cairn crude but given the poor quality, the price may have to be lowered.
Director (refineries), IOC, B N Bankapur, said the Panipat refinery can take 0.6 million tonne of Rajasthan crude, while the Gujarat refinery can take 0.8 million tonne. However, the pricing of Rajasthan crude has to be economical given its waxy nature. The discounts on Cairns crude, as per Bankapur, could be anywhere between $15-18 per barrel as compared with Bonny light variety (produced at Mumbai High by ONGC).
Cairns crude is being compared with that of the Mexican crude variety Maya, currently being sold at a substantial discount. On its part, Cairn feels the comparision of its crude to Maya is unjustified. The company thinks it should at least be on par with the Indonesian crude variety Dura for determining sales price. The Rajasthan crude has to be economically priced as we have to incur additional cost for transporting the crude which turns solid at normal temperature, he said. Cairn India plans to produce 8.25 million tonne of crude from its Balmer oilfield in Rajasthan and is looking at state-run refiners for selling the oil it plans to produce from second half of 2009. Alongside, Bankapur said that IOC is looking at raising the quantity of high sulphur crude for processing at its refineries to save money on crude oil imports. High sulphur crude is available at a discount of $ 4-5 per barrel to low sulphur crude oils.
Currently our refineries process 50% of high sulphur crude and we want to take this percentage up to 76% by 2012 through upgrading our refineries, Bankapur said. IOC, which produces 6-7 million tonne per annum of naphtha, is currently exporting around 2 mtpa. However, IOC said it expects naphtha exports to fall by more than half to around 0.6 mtpa from 2009.
The naphtha cracker at Panipat in Haryana, scheduled for commissioning by November 2009, will consume most of the naphtha produced by IOC.