New Delhi: Following government intervention, Vedanta Resources restored crude oil supplies to Indian Oil Corp (IOC) to the officially-allocated level, sources familiar with the matter said. Vedanta had cut back their supplies to the country’s top refiner for nearly three months until October despite the two negotiating oil rates for the year. The government assigns locally-produced crude to refineries depending on their location, transport logistics and processing capability.
All public and private oil producers and refiners in the country have to stick to the assigned quantities for the year. “We are committed to all our customers and greatly value our association with them. Commercials such as pricing and volume, therefore, are determined with a view to achieve the most efficient results for all stakeholders,” Sudhir Mathur, CEO of Cairn Oil and Gas unit, Vedanta’s oil and gas subsidiary, said. Both oil producers and refiners are free to negotiate the pricing formula between them, which is usually finalised at the beginning of the financial year for 12 months. However, talks between IOC and Vedanta concluded only after the middle of the financial year, sources say.
Sources added that Vedanta reduced their supplies to the refiner to mount pressure for a higher price. Vedanta also provides crude oil to private refiners, which offer higher rates when compared to state-run refiners. This gives private producers more reason to serve private refiners better.