Lagatar24 Desk
New Delhi, Sep 24: The Oil and Natural Gas Corporation (ONGC), a government-owned company, has entered into a deal to supply the crude oil it extracts from offshore fields near Mumbai to HPCL. This marks the second agreement of its kind in just two months, as India’s leading oil and gas producer opts for term contracts rather than auctions, where refiners often secure significant discounts.
ONGC stated in a post on the platform X, formerly known as Twitter, that it had signed “term agreement with HPCL for sale of crude oil from Mumbai offshore.” Although it was vague, sources familiar with the situation indicated that a deal had been reached for the sale of roughly 4.5 million tonnes of crude oil annually to the Mumbai refinery of Hindustan Petroleum Corporation Ltd (HPCL).
“This is the second term agreement sealed for sale of Mumbai Offshore crude oil post marketing freedom,” ONGC said.
Last month, ONGC struck a similar agreement to sell 4 million tonnes of crude oil annually to Bharat Petroleum Corporation Ltd (BPCL), which also operates a refinery to transform the crude oil into fuels like petrol and diesel at Mumbai. The agreement also included an optional 0.5 million tonnes.
ONGC’s fields in the Arabian Sea, off the coast of Mumbai, generate 13–14 million tonnes of crude oil annually.
A provision requiring that oil from blocks awarded before 1999 be sold to government-nominated clients, primarily state refiners, was scrapped by the government in June of last year. The previous regulation had prevented producers like ONGC and Oil India from receiving the highest market price.
Following that regulation modification, ONGC began holding quarterly auctions for crude oil produced in the western offshore Mumbai High and Panna/Mukta fields.
In the initial auction, refiners like Indian Oil Corporation (IOC) began looking for discounts comparable to those they received on Russian oil, sources said, even though the company received a little premium above Brent, the crude oil to which its Mumbai offshore is most similar in quality.
