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Cairn Seeks Oil Swaps To Circumvent Export Ban: Corporate India

Date 09-December-2013
Subject Cairn Seeks Oil Swaps To Circumvent Export Ban: Corporate India

Cairn India Ltd., the nation’s biggest onshore crude oil producer, is proposing swap deals in the commodity to help skirt the government’s ban on exports that yield higher margins.

Some Japanese utilities and Singapore-based refiners are interested in the high-wax crude extracted from Cairn’s fields in the northwestern state of Rajasthan, Chief Executive Officer P. Elango said in an interview. The company has sought India’s approval for a tripartite agreement that would replenish the exported volume with no loss to any of the parties including the government, he said.

Billionaire Anil Agarwal, who controls Cairn India, is seeking to increase the best profit margin among the biggest Asian oil companies as his metals and mining businesses founder in the South Asian country. Shipping to customers who are best equipped to process the low-sulfur crude may help the company command a premium versus a 15 percent discount on Brent prices it offers to local refiners, including Indian Oil Corp. (IOCL)

“In our case, what we are saying is not exports,” Elango said in New Delhi. “We are saying, let’s do a swap arrangement where this crude can go to another buyer” as some of them have much more value extraction potential of the oil, he said.

Cairn India, based in Gurgaon near New Delhi, has already sent a proposal to the government, which has been “received with an open mind,” Elango said. The three-way deal would essentially require Cairn India to flout India’s ban on crude oil exports, while its local customer makes up for the deficit by sourcing the commodity from an overseas supplier.


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