ONGC Signs Pact with Refiners To Sell Crude Oil

ONGC, the leading producer of oil and gas in India, has entered into long-term agreements with refiners to sell the crude oil produced from Mumbai offshore fields at a premium to the global benchmark Brent. Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) have each inked agreements to purchase around 4.5 million tonnes of crude oil from Oil and Natural Gas Corporation (ONGC). According to corporate sources, the oil has been priced at the current Brent crude oil price + 1%.

Brent, the world's best known benchmark for the raw material that is converted into fuels like petrol and diesel in refineries, is trading at USD 80 per barrel. As per the pricing in the term contracts, ONGC would get USD 80 plus USD 0.8 for the oil it will sell to HPCL and BPCL, as per economic times. 

ONGC's resources in the Arabian Sea, off the coast of Mumbai, yield 13–14 million tonnes of crude oil annually. A provision requiring the sale of oil from blocks given before 1999 to government-nominated clients, mostly state refiners, was eliminated by the government in June of last year. Producers like ONGC and Oil India were not receiving the greatest market price as a result of the previous norm.

Following that modification to the regulations, ONGC began holding quarterly auctions for crude oil extracted from the western offshore fields of Panna/Mukta and Mumbai High.

Refiners such as Indian Oil Corporation (IOC) were looking for discounts similar to those they received on Russian oil, sources said, even though the firm received a little premium in the first auction above Brent, the crude oil that its Mumbai offshore is most similar to in quality.