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ONGC, Oil India agree on crude price

Pradeep Puri in New Delhi

The contentious issue of pricing of crude produced by Oil and Natural Gas Corporation and Oil India Ltd has been resolved.

An agreement to this effect will be signed shortly between the producers and the three public sector oil marketing and refining companies.

"The pricing issue has been resolved amicably with ONGC. Only some fine-tuning needs to be done with OIL, which is a major player in the north-east," an industry source said.

"Since most of the senior officials are busy preparing for the increased competition from the private sector, it has not been possible to find a mutually convenient date for the signing of the accord. However, a small delay will not affect the finances or the operations of either company since the new prices will be effective from April 1, 2002," the source said.

As per the agreement, ONGC and OIL will get international prices for their crude. ONGC's Bombay High crude will be benchmarked with Nigeria's Bonny Light crude, which was traded at an average price of $24 a barrel during April-June 2002.

Till March 31, 2002, ONGC and OIL had been getting the administered crude price of $16 a barrel.

However, after the dismantling of the administered pricing mechanism in the oil sector from April 1, 2002, ONGC has been charging a provisional price of $22 a barrel pending the final agreement.

ONGC will supply Indian Oil Corporation 10 million tonnes of crude annually, Bharat Petroleum Corporation Ltd and Kochi Refineries 8.5 million tonnes, and Hindustan Petroleum Corporation Ltd and Mangalore Refinery the remaining 7.5 million tonnes of crude.

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