The Indian Oil Corporation (IOC) has bid for the entire crude output of Oil and Natural Gas Corporation (ONGC) to leverage its refineries, which will grow to 88 million tonnes by 2007.
Talking to newsmen after launching the new logo and packaging for IOC's Servo brand of lubricants, marketing director O N Marwaha said the corporation was negotiating with ONGC for entering a long-term marketing arrangement during the decontrolled era after March 2002. "We hope to finalise the agreement at the earliest," he said.
At present, IOC had a total refining capacity of 32 million tonnes, which it planned to expand to 88 million tonnes by the end of the 10th Plan, for which the ONGC crude could be used, Marwaha said. He said if the deal materialises, IOC would have the sole marketing rights of about 25 million tonnes of ONGC crude production.
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The two public sector corporations have already set up a governance committee to work out the arrangements of crude marketing by IOC after year 2002, besides equity participation by ONGC in IOC's petrochemicals, power and other projects.
Both the companies were also exploring possibilities of jointly bidding for oil equity abroad, Marwaha said.
Following the 10 per cent cross holding acquired by the two companies earlier in 1999, IOC and ONGC have agreed in principle to accord a most-favoured customer treatment.
IOC, which currently has a market share of 55 per cent, would also be entitled to market ONGC's production of LPG and other petrochemical products to national oil companies and host of other industries through its processing complexes.
An agreement with ONGC would help IOC procure about 12 lakh tonnes of LPG, over five lakh tonnes of ethane and propane and about two lakh tonnes of kerosene and other products, giving it an edge over the other refineries mainly in terms of transportation costs, corporation sources said.