Date:07/03/2007 URL: http://www.thehindubusinessline.com/2007/03/07/stories/2007030705140200.htm

ONGC, IOC to resolve row over North Gujarat crude

Richa Mishra

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New Delhi March 6 An amicable solution may be in sight between the two state-owned oil giants, ONGC and Indian Oil Corporation (IOC), on the ongoing tussle over North Gujarat crude.

ONGC has demanded a refund for a seven-month period starting December 2005 of Rs 65 crore from IOC for this crude sold by it to the refiner.

A senior IOC official said, "We have written to ONGC for a meeting. We want to resolve the issue." ONGC is seeking the amount deducted by IOC, which lifts the entire Gujarat crude (North and South) from the exploration company, on account of crude quality.

According to an ONGC executive, currently the company produces 6.2 million tonnes (mt) per annum of crude oil from the Gujarat fields (4.2 mt from North Gujarat and 2 mt from South Gujarat).

However, the refiner has not been too happy about the crude quality of North Gujarat produce stating that the quality has been declining in terms of high chloride content. IOC was using the produce for naphtha production, which the company exports. However, with the quality of crude being affected, the refiner felt that ONGC should bear the burden.

To this the exploration major had contented that the provisions of the memorandum of understanding inked between the two entities (ONGC and IOC) did not provide for any deductions of price based on the crude quality. Besides, the crude supplied to IOC met all the specifications stipulated in MoU.

While declining to give any more details, the executive said, IOC has been getting the crude at a lower rate as well as a discount of $0.75 per barrel is also being extended to the refiner for the LSHS content. ONGC has also been taking measures to improve the quality of the crude, but seems to have failed to impress IOC, he added.