ONGC, IOCL sign maiden Crude Oil Sales Agreement for North East

Dated : 09 October 2019 02:42:00 PM

Oil and Gas Corporation Limited (ONGC) and Indian Oil Corporation Limited (IOCL) signed Crude Oil Sales Agreement (COSA) for North East (NE) on 1 October at New Delhi. CGM (P) Chief Marketing ONGC Mr Sanjay Kumar and CGM (Tech) IOCL Mr S M Ukey signed the agreement on behalf of ONGC and IOCL respectively.

The COSA is with effect from 1 April, 2018 and for a term of 5 years with provision for extension of tenure by 3 years.

SM Ukey and Sanjay Kumar signing the agreement
SM Ukey and Sanjay Kumar signing the agreement

Director (Finance) Mr Subhash Kumar and Director (Onshore)-I/c Marketing Mr. Sanjay Kumar Moitra graced the ceremony with their presence and shared their valuable inputs on the key areas that need to be addressed by ONGC and IOCL going forward, to cement the ties further. They congratulated the team of officers involved in the finalisation and execution of the COSA.

From IOCL, Director (Refineries)-Designate Mr S M Vaidya graced the occasion and praised the teams for their efforts to conclude the NE COSA in a reasonable time.

Director (F) Subhash Kumar and Director (Onshore) SK Moitra addressing on the occasion
Director (F) Subhash Kumar and Director (Onshore) SK Moitra addressing on the occasion

ONGC supplies crude oil from Borholla, Geleky, Lakwa-Lakhmani, Rudrasagar and other fields of Assam and Jorhat Assets, along with condensate from Tripura in the North East to IOCL’s Refineries – namely Guwahati Refinery and Bongaigaon Refinery – as mandated by the Ministry of Petroleum and Natural Gas.

From 2002-2004, ONGC had entered into a Memorandum of Understanding (MoU) with IOCL for sale of crude oil across India. Later on, Government intervention on pricing and transportation charges of NE crude dictated the terms and conditions of the supply.

Sanjay Kumar and B Rajeev giving the welcome address and a brief presentation respectively
Sanjay Kumar and B Rajeev giving the welcome address and a brief presentation respectively

ONGC entered COSA with all the PSU refiners’ w.e.f 2010. However, these COSAs excluded the crude oil produced in North East due to prevailing pricing and other orders of the MoPNG.

After several unsuccessful efforts to formalize the COSA in the past, fresh attempts were resumed after the CPSE Conclave in April 2018, wherein the Director (Finance) of ONGC, IOCL, OIL and NRL agreed to formalize the COSA for North East Crude Oil.

Team Commercial, Team Legal and Team Marketing (Left) Master of Ceremony Debasis Nayak (Right)
Team Commercial, Team Legal and Team Marketing (Left) Master of Ceremony Debasis Nayak (Right)

With the guidance and impetus provided from senior Management of ONGC, the NE COSA could be successfully executed within the reasonable time, considering the complexities of NE COSA pricing, involvement of M/s OIL as crude oil pipeline transporter and balancing the needs of the Buyer-IOCL.

It may be noted that about 30% of the ONGC’s crude oil supply in North East is allocated annually by MoPNG to IOCL and the remaining 70% is allocated to M/s Numaligarh Refinery (NRL), which is a subsidiary of BPCL. ONGC supplies such crude oil through its own pipelines and through 1,400 kms long trunk pipeline of M/s OIL from Central Tank Farm (CTF) at Moran and Jorhat.

Team ONGC and Team IOCL - witness to the signing of the NE COSA
Team ONGC and Team IOCL - witness to the signing of the NE COSA

Key executives of both the companies attended the landmark event. The momentous occasion was possible only with proactive roles and involvement of Commercial Group led by CGM (F&A), Chief Commercial Mr B Biswas, along with GM (F&A) Mr Navin Bansal, I/c Commercial and Corporate Legal team led by GGM- Chief Legal Mr M S Khan. The finalization of this agreement was ably supported by timely inputs from Assam and Jorhat Assets.