IOC has shot-off a letter to the Oil Ministry, saying it cannot put ONGC-Mittal Energy Services Ltd (OMESL) on its mailing list for participation in its tenders for import of crude oil/LPG.
NEW DELHI: Steel tycoon L N Mittal's foray into oil and gas trading business through a joint venture with ONGC is facing fresh opposition from refiner Indian Oil Corporation (IOC), which feels the JV is ineligible to bid for its tenders.
IOC has shot-off a letter to the Oil Ministry, saying it cannot put ONGC-Mittal Energy Services Ltd (OMESL) on its mailing list for participation in its tenders for import of crude oil/LPG and export of petroleum products as the JV did not have the requisite 3-year experience.
"We cannot break norms for anybody," a government official said.
To be eligible for participation in public sector oil company tenders, a firm needs to have at least three years of international trading business experience and should have handled a thrusthold volume. Besides experience, the trading firm should also have parent company guarantees, which could be invoked in case of payment defaults. But in case of OMESL, the two promoters have agreed to provide only 'comfort letters', which has been rejected by IOC, the official added.
A top IOC official said the company had some years ago turned away Reliance Industries Ltd for similar reasons.
OMESL, formed earlier this year, provides trading, shipping and terminalling services.
Industry sources said Hinduja Group is also keen on re-entering the oil trading business. Gulf Oil, promoted by the Hindujas, had a subsidiary, Gopoco, for this business but was barred by public sector firms around 1992.
The government official said Mittal had last month written to the Petroleum Ministry over delays in getting OMESL registered with refiners. The Oil and Natural Gas Corporation (ONGC) board on September 6 decided to make application for registration of OMESL only with public sector refiners on the basis of a parent company 'comfort letter'.
In June, a government director on the board ONGC had blocked the exploration firm's equity participation in OMESL as the ministry did not want the state-run firm to make huge financial outlays for non-core trading business. Industry sources said, frustrated at the delays, Mittal Steel has signed a preliminary pact with Total of France for cooperation in oil and gas business including trading.
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