ONGC inks crude oil deal with HPCL, shifts to term contracts

Indian state-owned Oil and Natural Gas Corporation (ONGC) has unveiled its latest strategic move, entering into an agreement to supply crude oil from its Mumbai offshore fields to Hindustan Petroleum Corporation Ltd (HPCL). Following its recent pact with Bharat Petroleum Corporation Limited (BPCL), ONGC now forges another significant partnership, reinforcing its commitment to term contracts over auctions to steer clear of substantial discounts offered by refiners.

The announcement of this groundbreaking deal was made via X (formerly known as Twitter), with ONGC affirming a “term agreement with HPCL for the sale of crude oil from Mumbai offshore.” Although precise details remain undisclosed, insiders familiar with the situation have shared insights into the agreement, disclosing its scope covers approximately 4.5 million tonnes of crude oil annually, destined for HPCL’s Mumbai refinery.

This venture marks ONGC’s second term contract for the sale of Mumbai Offshore crude oil, a testament to the company’s newfound autonomy in marketing its products. ONGC’s annual crude oil production from its Arabian Sea fields, situated off the Mumbai coast, consistently ranges between 13 to 14 million tonnes.

Just last month, ONGC took a similar leap by sealing a deal to supply four million tonnes per annum of crude oil, with an optional 0.5 million tonnes, to Bharat Petroleum Corporation Ltd. BPCL, akin to HPCL, operates a prominent Mumbai refinery, playing a pivotal role in the conversion of crude oil into valuable products such as petrol and diesel. The move underscores ONGC’s strategic shift towards securing term contracts as it navigates the dynamic landscape of the energy sector.