Cairn's Rajasthan output likely to go to several buyers

Vol 11, PW 1 (17 May 07) Midstream & Downstream

Cairn Energy might need more time before it resolves the problem of how to evacuate and transport crude from its Rajasthan fields.

Mangalore Refinery remains the Indian government’s sole nominee for crude from Cairn’s Rajasthan fields but that arrangement has all but unravelled, according to our sources. PETROWATCH learns that early last month Mangalore Refinery informed the oil ministry that it would take only between 1m and 1.2m t/y of Cairn’s Rajasthan crude.

This leaves between 5.8m and 6m t/y unsold, for which Cairn must find a buyer. A source close to Cairn tells us “there are plenty of buyers for Cairn’s Rajasthan crude.

Cairn has a list of buyers with the quantities each of them wants but nothing can be firmed up till the pipeline issue is settled.â€‌ Moreover, “Cairn has held meetings right up to the highest level with each of these potential buyers.

â€‌ One of them, Indian Oil, disagrees. “Nobody from Cairn has talked to our top management,â€‌ says an IOC source.

“If there has been interaction with a working-level team, then that has not reached the top.â€‌ Our source retorts: “You seem to be more concerned about the crude than Cairn.

â€‌ We are told that Cairn officials, who used to communicate “at least once a fortnightâ€‌ with IOC top management, now “don’t seem to have the time to even say â€کhello’!â€‌ Our IOC source speculates: “Possibly Cairn has worked out an alternative arrangement for the crude. Maybe they are in direct touch with the ministry or Reliance and Essar.

â€‌ What’s more, even IOC can’t take the entire 7m t/y output from Rajasthan. “We definitely can’t take the entire crude,â€‌ says our IOC source.

“It’s not possible to fix a quantity unless our laboratories finish their work (defining crude configurations for various refineries).â€‌ Still, finding a buyer other than Mangalore Refinery is inextricably linked to Cairn’s application to the oil ministry to shift the delivery point outside the fields and acquire RoU (Right of User) permission to lay a pipeline.