New Delhi: Cairn India Ltd, a unit of UK explorer Cairn Energy Plc, said it reached an initial agreement to sell crude to Reliance Industries Ltd (RIL), its first privately owned customer.
Cairn, which was mandated by the government to sell oil to state refiners, will deliver crude oil to RIL’s refinery at Jamnagar in Gujarat from the Mangala field in Rajasthan through heated tankers, the explorer said in an emailed statement on Tuesday. The Union government has approved sales to private refiners, Cairn said.
Power business: Workers at Cairn India’s Mangala field. The firm will deliver crude oil to RIL’s refinery at Jamnagar in Gujarat
Gurgaon-based Cairn sought additional buyers for the Rajasthan crude should the government-named refiners decline to purchase its entire output. Production started in August and the first crude was sold to Mangalore Refinery and Petrochemicals Ltd last month. The government identified Indian Oil Corp. Ltd, the biggest state refiner, and Hindustan Petroleum Corp. Ltd as the other buyers.
The terms for the initial crude sales to RIL have been concluded, Cairn said. The implied price realization represents an average 10-15% discount to Brent crude on the basis of prices prevailing for the six months ended 30 September, according to the statement, which didn’t provide more details.
Cairn India shares climbed 2.9%, the most since 16 October, to Rs264.55 in Mumbai trading compared with a 3.3% increase in the benchmark Sensex index. RIL shares gained 5.6%, the most since 18 May.
RIL, India’s most valuable company, operates a 1.24 million barrel-a-day refining complex at Jamnagar, Gujarat.