Govt plans to stop Reliance Industries from selling crude to Jamnagar refinery.

The Oil Ministry is considering ordering Reliance Industries to stop selling KG—D6 crude oil to its Jamnagar refinery and instead sell it to Chennai Petroleum Corp Ltd. (CPCL) at lower rates.

The Production Sharing Contract (PSC) mandates producers to sell crude oil at the best available market rate so as to ensure highest profit petroleum and royalty to the government.

RIL, which sold crude oil from the MA oil field in the predominantly gas-rich KG-D6 block to CPCL during first five years of production on negotiated terms, floated a tender for sale of 2.5 million barrels of oil in 2014-15.

Jamnagar refinery of RIL won the tender as CPCL offered a pricing formula that was about $4-5 per barrel less than the formula quoted by the private sector refiner.

The Oil Ministry is now of the view that sale of crude oil is to be done on arms length basis and 'therefore cannot be done to an affiliate,' a senior ministry official said.


HBL