IOC and HPCL fight over rights to Ravva crude

Vol 6, PW 22 (15 Jan 03) Midstream & Downstream

ARGUMENT CONTINUES BETWEEN Indian Oil and Hindustan Petroleum over the rights to buy high-quality crude from the Ravva oilfield.

HPCL's Vizag refinery has been the government "nominated buyer" for Ravva crude since the PSC was signed in 1994. Last year IOC tried but failed to usurp HPCL's position.

This year it has begun lobbying to replace HPCL as the government's "nominee" well in advance of the financial year beginning April 2003. Shastri Bhawan brought the two sides together last November to find a way out, but failed.

IOC argues Ravva crude is desperately needed for its refineries at Barauni, Guwahati, Haldia and Bongaigaon because of falling production from Assam. IOC reckons if it can get Ravva crude "the economics of these loss making refineries will improve" and claims infrastructure is not a problem: its pipeline from Haldia to Barauni and Oil India's pipeline from Barauni to Bongaigaon are not used to full capacity: pumping imported crudeis costlier than pumping domestic crude.

IOC complains HPCL receives Ravva crude in uneconomical parcel sizes of 50,000 tonnes each. "If we are given Ravva crude, HPCL could import crude in larger ships and this will be more economical for them." HPCL is fighting hard to retain its control over Ravva crude, arguing that Vizag's proximity to the Cairn-operated field saves it money.

HPCL also argues that the ministry refused its request for Mumbai High crude because it was already getting Ravva crude. Vizag needs 4.5m t/y low sulphur crude.

It receives 2.4m t/y from Ravva and imports the rest. Shastri Bhawan is now considering a proposal to split Ravva crude between IOC and HPCL.