Ravva oil price review
Hindustan Petroleum wants to pay less for crude produced from Cairn India’s eastern offshore Ravva oil and gasfield.
Ravva’s crude oil price has been benchmarked since September 1999 against Malaysian Tapis oil and Indonesian Minas oil less 60 cents. This makes Ravva oil costlier by $4/barrel than the Brent crude oil benchmark.
HPCL asked Cairn India CEO Rahul Dhir and the oil ministry in July to revise the pricing system. “Tapis and Minas oil is not as widely traded as Brent or Bonny Light,” says HPCL.
Under article 20.4 (d) of the PSC, the oil pricing formula must be reviewed regularly. “Yet no pricing review has happened since 1999,” says a ministry source.
HPCL never complained as it was taking only 0.3m t/y of Ravva oil. But this year it has begun receiving supplies diverted from IndianOil’s Bongaigaon refinery.
HPCL now gets the entire 1.2m t/y or 36,379 b/d of Ravva oil production. Tapis and Minas are regional, not global benchmarks, unlike Brent.
