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Indian Oil tilts towards MRPL for procurement

New Delhi, Nov. 2: Indian Oil Corporation (IOC) has decided to give preference to products from the ONGC-owned Mangalore Refineries and Petrochemicals Ltd (MRPL) over those from the Reliance-owned Jamnagar refinery, once its current marketing agreement with Reliance Industries expires in March 2004.

Sources disclose that this forms part of the plan drawn up for the long-term growth of the national oil companies at a high-level meeting held by the petroleum ministry last week.

In the brainstorming session, attended by the heads of all the blue-chip public sector oil companies, it was decided that IOC, Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) would move into the upstream sector so that they can evolve as integrated oil companies. The initial move is being made in partnership with Oil and Natural Gas Corporation (ONGC).

Currently, the national oil companies pick up around 12 to 13 tonnes of petroleum products from Reliance Industries. While IOC markets around 7 million tonnes, BPCL and HPCL sell the remaining.

While the 27-million-tonne Jamnagar refinery set up by Reliance has helped the country achieve self-sufficiency in the downstream refining business, it is also felt that its products were getting precedence over those of MRPL. This had resulted in the poor offtake of MRPL products and was one of the main factors for it operating at 6 million tonnes rather than at the installed capacity of 9 million tonnes.

However, with ONGC taking over the refinery, it has been decided that IOC would lift a greater share of its products to enable it to operate at full capacity and raise its profitability.

While national oil companies will continue to pick up products from Reliance, as these are to be preferred to imports, the public sector refineries will not be allowed to suffer on this score.

In the new scenario, the performance of the refineries and retail outlets of the public sector oil companies will be benchmarked against the operations of world-class oil companies such as Exxon-Mobil, Chevron and TotalfinaElf.

Sources said it was also decided at the meeting that the downstream companies would step up their operations for marketing natural gas. Plans have to be chalked out for BPCL to market compressed natural gas (CNG) for automobiles and natural gas for domestic use in Pune and Kanpur. IOC will market natural gas in Lucknow and Bareilly in Uttar Pradesh, while HPCL will make the gas available to consumers in Andhra.

These gas companies will be floated on the same pattern as Indraprastha Gas Ltd, which is being run by BPCL in Delhi.

Each oil company will tie up with Gail and the state government concerned will also be a partner in the venture along with an FI such as ICICI.

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