More players want to enter Rajasthan oil fields

The petroleum ministry will soon have to decide whether to allow Cairn India to export crude from its Rajasthan fields as state-owned refiners are not keen on processing more than was allocated to them. The Barmer fields are expected to produce 240,000 barrels of oil per day (bpd) much more than the earlier projection of 175,000 bpd. It is expected to reach its peak production by the end of 2011. A senior oil ministry official said, “The government will have to revisit the issue of allowing export of crude output as refiners have expressed their inability to process the poor quality of heavy and waxy crude flowing from Cairn’s Rajasthan field.” The country imports over 75 per cent of crude requirements and has so far prohibited exports of crude oil.

In a recent letter, BPCL told the oil ministry, “Domestic oil refineries are not in a position to process the newly-discovered oil. The high viscosity and pour point of domestic crude compared with imported crude oil become incompatible with refinery configurations and cannot be processed on a standalone basis. “The demand for this crude will remain lower than its supply for the next two to three years and, therefore, it should be exported till such time when domestic refineries become capable of processing it independently,” it said. The heavy and waxy Rajasthan crude can produce only small volumes of kerosene and diesel and it cannot produce LPG. The Rajasthan block is now estimated to hold 6.5 billion barrels of oil, up from an earlier estimate of 4 billion barrels. The subsidiary of the UK-based firm plans to invest $2 billion over 2010-12 for the development of the field.