India's HPCL to go solo on Rajashtan greenfield refinery project

29 April 2013 07:36  [Source: ICIS news]

a refineryKOLKATA (ICIS)--India’s Hindustan Petroleum Corp Ltd (HPCL) has decided to implement a $6.87bn (€5.29bn) greenfield refinery project in Rajashtan on its own, without taking in any domestic oil firms as equity partner, a company official said on Monday.

The HPCL board, in a meeting last week, rejected offers from prospective minority investors such as oil and exploration (E&P) major ONGC Ltd and Cairns India Ltd, which is controlled by the Vedanta Group, the official said, without elaborating on the reason.

In a decision reached during the meeting, HPCL will have the 76% stake in the proposed 9m tonne/year refinery, while the remaining 26% will be picked up by the provincial government of Rajashtan, the official said.

The government of central Indian desert province of Rajasthan has offered an interest-free loan of $687m for the project, on top of its equity contribution, the official said.

Cairn will not be a stakeholder although about half of the project’s crude requirements would be sourced from the company’s oil fields in the province.

Half of the crude oil requirement of the refinery project would come from Mangala, Bhagyam and Asihwarya oil fields in Barmer district operated by Cairns India. Total production at the three oil fields is currently at 175,000 barrels/day.

The remaining half of the refinery’s crude needs would be sourced from ONGC and from imports, the official said.

Construction of the Rajashtan greenfield refinery in central India will start in the current fiscal year and is expected to be completed in 48 months, the HPCL official said.

HPCL will reconsider taking in a partner in the greenfield project after the commissioning of the refinery “if and when” a linked petrochemical plant will be built.

($1 = €0.77)

Author: Ajoy K Das

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