Mangalore Refineries and Chemicals Ltd. (MRPL) is planning to source its crude from Texaco. This agreement is likely to be in place by February 2000.
MRPL is a joint venture between the A.V. Birla group and Hindustan Petroleum, each holding a 26% stake in the company. The refinery has a capacity of nine million tonnes.
The company has been allowed to source its crude following the decanalisation of the crude oil imports. The company has been contracting its crude imports from the Indian Oil Corporation (IOC) so far. Following the decanalisation, it is the refineries, which will bear the risk as well as reap the benefits of the fluctuation in international oil prices.
As far as the local exploration companies are concerned, Oil and Natural Gas Commission and Oil India Ltd. are the only exploration companies operating currently. ONGC produces around 90% of India’s crude production. It produces around 32 million tonnes of crude, which is just about enough to meet the requirements of only IOC. With a tie-up between ONGC and IOC on the cards, the other refineries will have to any way tie–up with the international exploration companies. Reliance Petroleum has a crude procurement contract with Shell Overseas. The crude procurement strategy has to be drawn up keeping in mind the requirement of the refinery, the nature of the contracts, the combination of contracts whether spot or term and the type of shipping to be employed.
From the point of view of MRPL, the costs on the production side will depend entirely on its own crude procurement skills rather than on the IOC’s selling price. This will only add to the competitive pressures that
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