Tuesday, September 5 2006 11:48 Hrs (IST) - World Time -

London: India's Oil and Natural Gas Corp (ONGC) and its British partner Cairn Energy Plc have shelved plans to build a Rs 80 billion refinery in Rajasthan and instead may sell the crude oil found in the state to Reliance Industries' or Essar Oil.

"Building a refinery in landlocked state is uneconomical. With IOC's Mathura and the expanded Panipat refinery in the region and HPCL building a nine million tonne per annum refinery at Bhatinda by 2010, there will be no market for the planned refinery at Barmer (Rajasthan)," an ONGC official said.

ONGC plans to get its subsidiary Mangalore Refinery and Petrochemicals Ltd (MRPL) de-nominated as the official offtaker of crude oil found by Cairn Energy in Rajasthan and instead sell it to refiners.

"We would like to sell the crude oil to public sector refineries first. But due to the waxy nature of the Rajasthan crude, its best value can be realised only at the Jamnagar refinery (of Reliance) or the upcoming Vadinar refinery (of Essar Oil)," he said.

Earlier, Indian Oil Corp (IOC) had done economic analysis of Cairn's Rajasthan crude and concluded that it possessed transport dilemma.

The official said ONGC-Cairn, the 30:70 owner of the Rajasthan oilfields, will build a crude oil transportation pipeline from Barmer to Jamnagar and build the cost in the field development.

"Jamnagar has a port and we will have an option to ship the crude oil to MRPL," he said.