Cairn to supply Mangala oil for RIL’s Jamnagar refinery

Cairn India Ltd, a unit of UK firm Cairn Energy, has announced having reached a deal to supply crude oil from its Mangala field in Rajasthan, India's biggest onshore oilfield, to Reliance Industries Ltd's refinery in Jamnagar in the neighbouring state of Gujarat.

Cairn, which had earlier been mandated by the government to sell oil to state refiners, will deliver crude oil to the Jamnagar refinery using trucks, the explorer said in an e-mailed statement on Wednesday. The union government has approved sales to private refiners, Cairn said. Financial details were not disclosed.

"Cairn has requested the government to nominate additional offtake arrangements and discussions with other private refiners are in progress," the Gurgaon-based company said in the statement.

It also said crude supplied to Reliance will be sold at an average 10-15 per cent discount to Brent on the basis of prices prevailing for the six months to September 2009.

Reuters quoted an unnamed source as saying Cairn would be supplying about 1.92 million barrels to Reliance until 31 March. The first parcel from the Rajasthan terminal is expected to be sent on 24 November 24," the source said.

The Indian government has allocated about 5 million barrels or 700,000 tonnes to three state-run refiners - Hindustan Petroleum Corp, Mangalore Refinery and Petrochemicals Ltd and Indian Oil Corp.