HPCL seeks foreign partners for refinery project

France's Total unlikely to back Vizag plan

HPCL seeks foreign partners for refinery project

Hindustan Petroleum Corp is scouting for a foreign partner as it revives a plan to build a 300,000 barrel per day (bpd) refinery and a petrochemical project, its chairman said on Tuesday.

"GAIL has confirmed its participation in the petrochemical project... we have written to foreign companies if they are interested in the project," S. Roy Choudhury told reporters.
HPCL shelved the plan in 2010 after France's Total and the L N Mittal group, owner of the world's top steel firm ArcelorMittal, pulled out of the project after the economic downturn hit global demand for refined fuels globally.

Total has so far not responded and indications are that it may not be interested. HPCL has also approached OIL, Indian Oil Corp (IOC) and Oil and Natural Gas Corp (ONGC) for partnership. "We estimate that our petroleum product sale would be 50 million tonnes in 2020 and refining capacity would be around 42 million tonnes," he said.

He said HPCL had sought allocation of land for the project, to be built in Visakhapatnam on the south east coast. HPCL is aiming to have a refining capacity of 840,000 bpd by 2020. HPCL currently owns a 6.5 million tonnes refinery at Mumbai and a 8.3 million tonne unit at Vizag. While the Vizag plant is being expanded to 15 million tonnes, HPCL is also setting up a 9 million tonnes refinery at Barmer in Rajasthan at the cost of Rs 37,320 crore.

It operates the 166,000 bpd Vizag refinery and a 130,000 bpd plant in Maharashtra. It also has a stake in the 180,000 bpd Bathinda refiner, operated by Hindustan-Mittal Energy Ltd, part-owned by L N Mittal.

HPCL had in 2007-08 planned the only-for-exports refinery to target demand in South East Asia and the Middle East. The five-way alliance of HPCL, explorer OIL, gas utility GAIL India, Mittal Investment Sarl and Total had in October 2007 signed a memorandum of understanding to look at the feasibility of setting up the Vizag project. Total did a pre-feasibility study for the refinery and demand studies, while GAIL was in charge of the study of the petrochemical unit. But the project was put on hold before equity structure could be decided.

The chairman said the project will depend upon availability of land for which the company has approached the Andhra Pradesh government. "We would need 3,000 acres of land for the project," he said.

While the refinery was to be built to process sour and heavy crudes, which are cheaper than low-sulphur sweat crude oil, the petrochemical plant was to use the naphtha produced in the refinery as feedstock. 

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