IOC opposes ONGC-Mittal bid for oil trading

L N Mittal's foray into oil and gas trading business through a joint venture with Oil & Natural Gas Corporation (ONGC) is facing opposition from Indian Oil Corporation (IOC), which feels the JV is ineligible to bid for its tenders.

IOC has shot off a letter to the oil ministry saying it cannot put ONGC-Mittal Energy Services (OMESL) on its mailing list for participation in its tenders for import of crude oil/LPG and export of petroleum products as the JV did not have the requisite 3-year experience, a government official said.

To be eligible, a firm also needs  to have handled a thrusthold volume.
"We cannot break norms for anybody," the official said.

Besides experience, the trading firm should also have parent company guarantees, which could be invoked in case of payment defaults. In case of OMESL, the two promoters have agreed to provide only comfort letters, which has been rejected by IOC, the government official said.