India ONGC gets better price for oil under new rules – sources – Reuters

The Oil and Natural Gas Corp’s (ONGC) logo is pictured along a road in Ahmedabad, India September 6, 2016. Picture taken September 6, 2016. REUTERS/Amit Dave

NEW DELHI, Sept 27 (Reuters) – India’s Oil and Natural Gas Corp (ONGC.NS) sold oil for the first time in a three-month local tender, commanding $5-8 a barrel higher than existing rates under new rules that allow producers marketing freedom, industry sources said.

ONGC, the country’s leading oil explorer, has accepted bids at this level through auctions of light sweet oil from its western offshore field, including supplies from the country’s flagship fields, Mumbai High, have they stated.

In June, India scrapped a rule that said oil from blocks awarded before 1999 had to be sold to government-appointed customers, mainly state refiners. This meant that producers such as ONGC and Oil India (OILI.NS) often sold oil from these blocks at below-market prices.

ONGC had offered 33 lots of 412,500 barrels each – 26 Uran cargoes and seven offshore Mumbai cargoes – for sale from November 1 at a minimum premium of 50 cents on the average monthly Brent price, according to a document from tender seen by Reuters.

Western offshore assets, including the Mumbai High fields, account for about 70% of ONGC’s annual production of nearly 20 million tonnes, or about 400,000 bpd.

All shipments were sold to state refiners except one, which was attributed to Reliance Industries Ltd (RELI.NS), sources said.

State refiner Hindustan Petroleum (HPCL.NS) bought 15 shipments; Mangalore Refinery and Petrochemicals (MRPL.NS) bought five; and Bharat Petroleum Corp (BPCL.NS) was the highest bidder for three, the sources said.

Indian Oil Corp (IOC.NS), the country’s top refiner, secured one shipment while its subsidiary Chennai Petroleum Crop (CHPC.NS) received eight, the sources said.

Indian refiners have offered to pay a premium of $1.80-1.85 per barrel for shipments from Uran, where supplies pass through a pipeline, $3.8-6.5 per barrel for offshore shipments and about $1.55 per barrel for a package from the Panna Mukta field, they said.

Uran shipments get a lower premium because local drawdowns make crude more expensive than offshore supplies.

Sources said the CGSB hopes to get better participation in subsequent tenders.

None of the companies involved responded to Reuters requests for comment.

India, the world’s third largest oil importer and consumer, imports more than 85% of its oil and bans crude exports.

Reporting by Nidhi Verma. Editing by Gerry Doyle

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