HPCL to set up LNG terminal in Mundra

State-run oil major Hindustan Petroleum Corporation Ltd (HPCL) is looking to set up a liquefied natural gas (LNG) terminal - with a capacity of at least five million tonne - in Mundra, in northern Gujarat.

Speaking at the company's annual general meeting, Mahesh B Lal, chairman and managing director, HPCL, said, "We are setting up our own facility in Mundra. Consultants are conducting a feasibility study currently, and reports will be available in three months from now."

He pointed out that the loss incurred through imports is at least $3 million British thermal units, which is roughly 50 per cent of the per unit import cost.

The company is also looking at a joint LNG terminal in Mangalore along with the other oil giant Oil and Natural Gas Corporation and eyeing acquisition of 26 per cent stake in the Shell Hazira terminal.

Lal said the due diligence on the project is being carried out, and HPCL has already acquired in principle the stake in the terminal.

On the refining margins front, Lal revealed that HPCL has been enjoying a margin of $8 per barrel in the Vizag refinery in July-August, compared to an average level of $5 per barrel.

HPCL is also looking to strengthen its petrochemicals business, by producing aromatics, which have a market in south-east Asia. "This will be a value addition to our refining business," Lal said.

The company has a capital expenditure plan of Rs 11,000 crore over a planned period, with approximately Rs 2,000 crore allocated for joint ventures, new pipelines and green fuel projects. Further, Rs 5,000 crore has been kept aside for modernisation and upgrade of refineries, and implementation of new projects.

The funding for these ventures would largely come through oil bonds worth Rs 777 crore, maturing in 2012. HPCL has the option of selling these, and raising capital from the market as well. The company is still awaiting details on the issuance of balance bonds worth Rs 2,000 crore.