The Union Government is mulling over a proposal to allow Cairn India to market the unallocated portion of the crude oil to be produced from its Rajasthan fields.

The company is likely to be permitted to sell the output to other refiners, including in the private sector, the output that Indian Oil Corporation, Hindustan Petroleum Corporation and Mangalore Refinery and Petrochemicals cannot absorb.

Allowing Cairn the marketing freedom is likely to ensure that the produce is used locally. Else Cairn will have to be allowed to export the crude oil. Private refiners such as Reliance Industries and Essar Oil have shown interest in sourcing Cairn crude. The government has already allocated three million tonne of crude oil of the expected total production of 8.85 million tonne by 2011.

To avoid differential pricing of crude oil, the government has asked the Petroleum Planning and Analysis Cell to study and suggest a benchmark for the Rajasthan crude. For this purpose an international consultant is likely to be appointed.

Cairn India is likely to commence production by August 2009.

Also See:

Centre grants DoC to Cairn India's 3 discoveries in Rajasthan (19-Jan-09)