Essar Oil is opposing Cairn India's idea of exporting or swapping crude oil produced in abroad. The company's director and chief executive, L K Gupta, tells Shine Jacob Indian refineries can use even double of what Cairn currently produces in Rajasthan. Edited excerpts:
According to the petroleum ministry, none of the Indian refineries can handle more than 15-20 per cent of Cairn crude from Rajasthan. What is your take?
Cairn started its supply to MRPL (Mangalore Refinery and Petrochemicals Ltd) way back in 2009 and we started intake of Cairn's crude from 2010 for our Vadinar refinery. After sometime, Reliance also started taking Cairn's crude.
Now, the production from Mangla has increased to 180,000 barrels a day, with even Indian Oil as its customer. As the Cairn crude is heavy and waxy, it is difficult to handle. The argument that we can take only 15-20 per cent does not hold. We have increased our capacity and complexity to have even 100 per cent of Cairn's crude production.
Unless the country produces enough crude oil, how are you looking at Cairn India's proposal to export and swap crude oil in the international market?
This is completely illogical when the country is depending on imports for 85 per cent of its crude requirement. Even if Cairn's production increases from 180,000 barrels a day to 300,000 barrels, we would be able to consume the entire crude. Or even if Cairn produces 400,000 barrels a day, the two private sector refineries at Jamnagar can consume the entire production. The two private refineries in Jamnagar alone can consume more than what Cairn India can dream about producing from Rajasthan. These two refineries can consume not just 20 per cent but what three such fields can produce. All I can say is that we are fully capable of using waxy crude from Cairn if that is the logic being given to argue for export.
What sort of changes have you made to handle waxy crude from Cairn India's field? Are you planning any further expansion?
We have invested about Rs 10,000 crore, by improving our capacity and complexity keeping in mind that we can use even 100 per cent of Rajasthan's crude oil production. We have a special unit only to handle such heavy crude. Currently, of 405,000 barrels of our crude oil intake a day, Cairn India contributes nearly 15 to 17 per cent. More than further expansion, our focus is on optimising the current refinery. Moreover, to transport Cairn crude to the refineries at Vadinar or to Indian Oil refineries, no extra infrastructure is required as they already have a pipeline in place.
