New Delhi: Rebuking criticism over the sale of condensate from its KG-D6 fields to the company's refinery in Jamnagar, Reliance Industries has said it followed a competitive bidding process in which state-owned HPCL was outbid.
RIL Senior Vice-President (Commercial) B Ganguly on November 18 wrote to the Oil Ministry and the Directorate General of Hydrocarbons (DGH) saying, "The price at which the condensate has been sold represented the best available price and there was no competing or even matching offer."
Replying to the DGH's concerns over the sale of gas condensate from KG-D6 to the Jamnagar refinery, the company wrote saying the sale was done following a transparent competitive bidding system, as envisaged under the Production Sharing Contract.
In response to a tender for June, 2011, to May, 2012, sale, the company's Jamnagar refinery in an April 18 bid quoted a price of Brent crude oil price minus USD 20 per barrel.
Hindustan Petroleum Corp Ltd (HPCL) submitted its bid on April 19 quoting a price of Brent minus USD 25 per barrel.
On RIL's request to both bidders to review their price proposals, "HPCL revised its bid upward by a mere 5 cents per barrel," the company said.
"HPCL's revised offer of Dated Brent minus USD 24.95 per barrel was still USD 4.95 per barrel lower than that offered by RIL's Jamnagar Refinery," he wrote.
"It may be noted that despite HPCL's Visakhapatnam Refinery being located on the East Coast, it quoted a price which was much lower than the price quoted by a refinery (RIL Jamnagar) at the northern end of the West Coast. HPCL's price was considered as not justified and against the interest of the parties to the PSC," he added.
"The bid of RIL Jamnagar, was clearly the best available price at the delivery point... Clearly the sale of KG-DWN-98/3 gas condensate was finalised through a competitive bidding process involving all oil refining companies in India, (and) the requirements of Article 19.2 of the PSC on valuation have been met," the company wrote.
RIL said no "positive response from any party (either from PSUs or private sector refineries)" was received against a tender for sale of condensate in 2010-11.
"HPCL specifically mentioned in their regret email dated May 28, 2010, that due to logistics constraints, they would not be able to participate in the tender," the company said, adding that only its Jamnagar Refinery quoted a price of Brent minus USD 25.6 per barrel.
RIL informed the Oil Ministry of the results of the tender through a letter dated June 2, 2010, which was followed by a reminder on June 30, 2010.
First Published: Thursday, December 1, 2011, 16:04