(Updates with details, background)
By Rakesh Sharma
Of DOW JONES NEWSWIRES
NEW DELHI -(Dow Jones)- Cairn India Ltd. (532792.BY), a unit of Cairn Energy PLC (CNE.LN), Wednesday said it has signed an initial pact to sell crude oil to Reliance Industries Ltd. (500325.BY) from its Mangala oil field in northwestern Rajasthan state.
The agreement is Cairn's first to supply crude oil from its Rajasthan field to a private refiner.#
Cairn, which began commercial production at the field Aug. 29, is currently producing 10,000 barrels of oil a day. It plans to ramp up output to 125,000 barrels a day in the first half of 2010.
Cairn, which earlier had government approval to sell crude to India's state-run refiners, on Oct. 29 said the federal government has agreed that private refiners qualify as additional offtakers of the Mangala crude.
Cairn didn't provide any details on the quantity of crude or the price at which it will supply to RIL.
However, Cairn said the implied price realization represents an average 10%-15% discount to Brent on the basis of prices prevailing for the six months to September.
RIL, India's largest company by market capitalization, owns two refineries in western India with an aggregate refining capacity of 1.24 million barrels a day. The refineries can process heavy crudes and produce superior products.
Cairn is also in talks with India's second private refiner Essar Oil Ltd. (500134.BY) to supply crude, its chief executive Rahul Dhir said Tuesday.
Cairn will deliver crude to RIL's Jamnagar refinery in the western state of Gujarat through heated crude oil tankers as the supply pipeline is still under construction.
-By Rakesh Sharma, Dow Jones Newswires; +91-11-4356-3334; rakesh.sharma@dowjones.com