ONGC to reevaluate crude prices monthly

Two weeks after India dismantled the government-controlled, administered pricing mechanism for petroleum products, Oil & Natural Gas Corp. (ONGC) declared that it would adjust prices of its crude oil once a month, in line with international prices. Prices for various crudes will fluctuate, emulating international counterparts.

April 23, 2002

By an OGJ Online Correspondent

MUMBAI, Apr. 17 -- Two weeks after India dismantled the government-controlled administered pricing mechanism for petroleum products, Oil & Natural Gas Corp. (ONGC) declared that it would adjust prices of its crudes once a month, in line with international prices.

"This is a new arrangement which we are negotiating with domestic refiners," said Subir Raha, the state-owned ONGC's chairman and managing director. "International prices move on a day-to-day basis, but we are restricting ourselves to a monthly adjustment based on the average for the previous month.

"Before Apr.1, we were receiving $16/bbl, which was way below the prevailing international price. The new prices will boost our profits significantly for the financial year 2002-03."

Raha said ONGC would have different prices for different crudes, depending on their viscosity and other characteristics and in relation to their international counterparts.

The New Delhi-headquartered oil major produces 500,000 b/d of crude and sells it to state-run refiners such as Indian Oil Corp., Hindustan Petroleum Corp., and Bharat Petroleum Corp.