New Delhi: Indian Oil Corp (IOC) plans to seek 'heavy discounts' from Cairn India for buying its Rajasthan crude oil to make processing of waxy crude at either Panipat or Gujarat refinery economically viable.

"Cairn's Rajasthan crude oil can be currently processed at our Panipat and Barauni refinery. Our Gujarat refinery will also acquire capability to process such a crude oil by 2009," said IOC director (refineries) B N Bankapur.

But, processing the Rajasthan crude that has a very high pour point and viscousity with 70-75 per cent heavy ends can only be economically viable only if "heavy discounts are extended," he said.

"The Rajasthan crude can be processed at refineries which have coker. Currently, our 12 million tons a year Panipat refinery in Haryana and Barauni refinery in Bihar have coker and we are installing one at Gujarat refinery by 2009 (when Cairn expects to being production from Rajasthan)," he said.

Bankapur said IOC can take the crude at a port in Gujarat, up to which Cairn and its partner Oil and Natural Gas Corp (ONGC) will have to construct a pipeline, and ship it across to Haldia from where it can be pumped to Barauni.

"IOC (which originally was the government-appointed nominee for buying Cairn crude) withdrew from buying Rajasthan crude because it did not make economic sense to process such a crude. It is a risky proposition and unless huge discounts are given no one will be willing to take such risks," he said.

Cairn is ready to start production in small quantities from its Saraswati field and it waiting for finalising of oil sales. In another 12-months, it can put Raageshwari oil field to production but the giant Mangala field would come in 2009 when output peaks to 150,000 barrels per day.

Besides IOC, potential customers of Cairn crude include Reliance Industries and Essar Oil, who have refineries in Gujarat.