No Panna/Mukta crude for IOC

BG Group of UK, Oil and Natural Gas Corp and Reliance Industries, the joint operators of Panna/Mukta and Tapti oil and gas fields, have decided to snap crude oil sale from the fields to Indian Oil Corp and instead sell most of it to Mangalore Refinery and Petrochemicals Ltd.

"Indian Oil has not been paying us storage tanker cost for the past 10 years. There are few other outstanding issues with the government nominee for Panna/Mukta oil (IOC) that is leading to revenue loss for the operators," a top official in the joint venture said on Tuesday.

BG-ONGC-RIL produce 36,000 barrels of crude oil per day from Panna/Mukta fields which they now plan to sell to MRPL, a subsidiary of ONGC.

"The joint venture partners have agreed to approach the government for denomination of IOC as government for sale of Panna/Mukta oil," the official said.

If the ministry of petroleum and natural gas agrees to the demand, BG, ONGC and RIL would be free to sell the crude oil from the fields to anyone they wish to. The three partners would be entitled to crude oil proportionate to their shareholding - ONGC has 40 per cent interest in the joint venture while BG and RIL have 30 per cent apiece.

"In case Panna/Mukta crude oil is supplied to MRPL, it is envisaged that MRPL would be saving in the range of $3 to $4 per barrel (domestic crude vis-a-vis imported crude).

Net saving would thus range between $346 to $462 million for all the oil produced from the fields and $242 to $323 million for 70 per cent of oil (in case Reliance decides to take its 30 per cent share to its Jamnagar refinery)," the official said.

The official said Reliance has not yet disclosed what it would want to do with its share of oil from Panna/Mukta fields.

"BG certainly has no interest in taking away its share and would be happy as long as it gets market price," he said.