International players eye stake, domestic firms invited overseas to set up refineries. | |
| Six deals-in-the-making were unveiled in the last seven days in the downstream sector. |
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| Even as international companies are looking for a share in the fast-growing refinery sector in the country, domestic oil companies have been invited by countries such as Yemen, Nigeria and Saudi Arabia to pick up stake in existing refineries and also set up greenfield units. |
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The trend is obvious "" "India is on its way to becoming the world's refiner," Indian Oil Corporation's Director (Refineries) B N Bankapur said.
PASSAGE TO INDIA
International majors looking at India... | | Global player | Prospective
partner | Refinery
project | | Saudi Aramco | IOC | Paradeep | | Total | HPCL | Vizag | | PDVSA (Venezuela) | ONGC | RPL |
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| In India, investments needed for setting up refineries is much lower, as is the cost of operation. |
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"Construction work in our Paradeep refinery involves around 25,000-30,000 people. Nowhere else in the world would that kind of numbers be easily available, and at competitive costs," Bankapur said.
AIMING BIG
And Indian majors looking overseas | | Indian company | Destination | | ONGC | Yemen | | RIL | Yemen | | IOC | Nigeria |
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| An analyst says another reason why global players are flocking to India is because the country is logistically well placed for refineries. |
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| Besides being a major market for crude oil and petroleum products, it is in close proximity to major demand centres such as China. Also crude oil from West Asia can easily be brought to refineries in India. |
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| The analyst adds that overseas oil companies are keen on India, as it is not easy to set up refineries in Europe and the US any more due to stringent environmental norms. |
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| International oil majors are therefore keen to get exposure in this sector in India. Saudi Arabian company Saudi Aramco is keen to pick up a 26 per cent stake in IOC's Paradeep refinery, while steel magnate L N Mittal is reported to be in talks with Hindustan Petroleum Corporation (HPCL) to pick up a stake in the 9 million tonne per annum upcoming refinery in Bathinda. |
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| HPCL is also likely to offer 50 per cent stake in a new 9 million tonne refinery in Vishakapatnam to French company Total. |
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| Total will pick up the stake in collaboration with Kuwait Petroleum, which was earlier offered equity participation in IOC's Paradeep refinery and the naphtha cracker plant in Panipat. |
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| "If a global player is interested in participating in our refineries, we would definitely welcome them," Bankapur said. |
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| Venezuelan state-owned company Petroleos de Venezuela is also interested in a stake in Mangalore Refinery and Petrochemicals. |
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| The company's Vice-President (exploration and production) Luis F Vierma recently said Venezuela would start exporting crude oil to India and they were keen on participating in the refinery segment in the country. |
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| Indian oil companies too are keen on exploring foreign shores. The country's three major oil companies "" Oil and Natural Gas Corporation (ONGC), IOC and Reliance Industries "" have been invited by Yemen and Nigeria to set up refineries overseas. |
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| Yemen has invited ONGC to build a 1,00,000 barrels-per-day refinery on its Arabian Sea coast at an investment of $1 billion. Reliance too is likely to would set up a 50,000 barrels per day refinery in the West Asian country, and is also reportedly looking at utilising its expertise in refinery operations in countries such as Russia. |
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| IOC too is planning to set up a 200,000 barrels per day greenfield refinery in Nigeria. Besides, the Fortune 500 company will bid for a state-run refinery at Port Harcourt for equity participation in the oil-rich country. |
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| However, these refineries will only come up if the companies are given stakes in oil blocks in the countries. "We are keen on investing overseas. But we will consider a refinery in Nigeria only if substantial quantities of equity oil is made available to us," Bankapur said. |
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| ONGC too will set up a refinery in Yemen only if it is allotted oil blocks in the country. However, HPCL Chairman and Managing Director Mahesh Lal is the only one singing a different tune. |
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| "When global companies are coming to India, we should attempt to cash in on the huge opportunities. We don't need to go overseas, when the market is here," Lal told Business Standard during Petrotech 2007. |
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