ONGC shelves Rajasthan refinery plan; plans to sell oil to Reliance, Essar

Mumbai: Oil and Natural Gas Corp (ONGC) and partner UK''s Cairn Energy Plc have shelved plans to build a Rs8,000 crore refinery in Rajasthan. The crude oil found in the state would, instead, go to Reliance Industries or Essar Oil.

ONGC will also get its subsidiary Mangalore Refinery and Petrochemicals Ltd (MRPL) de-nominated as the authorised recipient of Cairn crude in Rajasthan.

"Building a refinery in landlocked state is uneconomical. With IOC''s Mathura and the expanded Panipat refinery in the region and HPCL building a nine million tonne per annum refinery at Bhatinda by 2010, there will be no market for the planned refinery at Barmer (Rajasthan)," an ONGC official said.

"We would like to sell the crude oil to public sector refineries first. But, due to the waxy nature of the Rajasthan crude, its best value can be realised only at the Jamnagar refinery (RPL) or the upcoming Vadinar refinery (Essar Oil)," he said.

ONGC-Cairn plans to build a crude oil transportation pipeline from Barmer to Jamnagar and build the cost in the field development. "Jamnagar has a port and we will have an option to ship the crude oil to MRPL," he said.