Indian Refinery Projects

abarrelfull wrote on 19 Apr 2010 11:19
Tags: cairn chennai hpcl india project refinery

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In the last few days there have been a number of significant news items concerning refinery projects in India. First up is HPCL

State-controlled Hindustan Petroleum Corporation Limited (HPCL) announced the halt of its plans to build a 300,000 barrel per day (bpd) project in the southern city of Visakhapatnam due to a lack of investment. Two of the project's key partners, French industry giant Total and local-based Mittal Investments have both decided to end their interest in the venture.

Like other similar projects elsewhere, it can be difficult to keep the interest of private investors, with the current state of the industry. When faced with paying for the whole project, even the state owned companies, sometimes change their mind.

This is all in spite of the Indian market growing at a fast rate.

Meanwhile, Chennai Petroleum, another Indian Oil subsidiary, faces a slightly different problem.

Chennai Petroleum Corp Ltd (CPCL) has put on hold its plans for setting up a 15 million tonnes per annum (mtpa) refinery at Ennore, as it had not received environmental clearance. The company is instead looking at investing Rs 9,000-Rs 10,000 crore on expanding its existing refinery.

Probably the setback is for the best, as it has to be more efficient to expand an existing facility.

On the other hand, as if to demonstrate that Indian is still a place for refinery investments, we have this news.

A leading private oil refiner is willing to build a well-head refinery at Cairn India’s Barmer oil-field after the Rajasthan government has agreed to give tax concessions.

It all goes to raise a big question however. If the government offers tax concessions, and if they award the permits, and if investors can be found, then a refinery can be built. If price controls are not too onerous, it might even make a profit. Its not exactly a ringing endorsement of the sector is it.

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