Kuwait Petroleum again proposes to invest in IOC’s Paradip refinery

KOLKATA (ICIS)–Kuwait Petroleum Corporation (KPC) has made a fresh proposal to invest in Indian Oil Corporation Limited’s (IOC) Paradip refinery and petrochemical project, whose commissioning has been delayed till second quarter of 2015, a senior IOC company official said on Thursday.

KPC had been expressing interest in participating in the Paradip refinery for the last two years but had backed off after the last proposal in March 2014, the official said.

The Kuwaiti national oil company submitted a fresh proposal in August and negotiations have commenced once again, the official said adding that IOC was hopeful of smoothening the roadblocks.

IOC was willing to offer a 26% equity stake in the refinery project but KPC was keen on the higher stake of around 49%, the official said.

KPC was willing to combine its investments in the refinery project along with downstream petrochemical plant planned by IOC but the latter had still not taken a final decision, he added.

It was also not clear from KPC’s latest proposal whether the latter would seek exclusive agreement to source crude from Kuwait that would not be acceptable to IOC, the official said.

However, these issues have existed ever since KPC’s first proposal came in but none of these were deal-breakers and talks were being held because IOC was still keen to rope in an overseas investor in the project, he said.

Meanwhile, the commissioning of the $5bn refinery with capacity of 15m tonne/year has been delayed till second quarter of 2015 owing to `logistical’ problems, the official said without elaborating.

The refinery was scheduled for trial runs in December 2014.

IOC’s plan for a downstream petrochemical plant with the refinery project has now been linked to successful refinery operations and improved market conditions for the petrochemical products, the official said.

Over the last two year, India’s largest oil refiner-marketer had been considering a 600,000 tonne/year standalone polypropylene plant entailing an investments of around $1.2bn at the Paradip Petroleum, Chemicals, Petrochemical Investment Region (PCPIR) in eastern Indian coastal province of Orissa where its refinery project was being implemented.

Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections