More than a year after scrapping the Rajasthan refinery project, state-run Oil and Natural Gas Corporation (ONGC) will re-examine the feasibility of setting up a 15 million tonne (MT) refinery in the desert district adjoining Indo-Pak border.
Rajasthan's Chief Minister Ashok Gehlot demanded a refinery project in the state that will provide direct and indirect employment to one lakh people. Originally proposed in 2004-05, the project was declared economically unviable after the previous Vasundhara Raje government in Rajasthan did not agree to give fiscal incentive like interest free loan and sales tax exemption for the project.
"Whatever (fiscal) concession you need, we will offer," Gehlot said at a stone cutting function here for laying off a pipeline to transport Cairn India's Rajasthan crude.
The chief minister first raised the demand for the refinery at a function yesterday where UPA Chairperson Sonia Gandhi was present and today again reiterated the demand for a refinery at Barmer district to process Cairn India's oil found in the area.
"We had a meeting yesterday and Petroleum Minister Murli Deora and ONGC Chairman R S Sharma have assured that they will re-examine possibility of the refinery," he said, adding that the state government recognise the fact that a project can be set up only if economically viable.
Deora on his part said that ONGC would do a feasibility study again considering the fiscal concession that the Rajasthan government was willing to extend to the project.
The refinery is not considered viable because it will need, besides fiscal incentives, two pipelines — one to import crude oil and the other to export products out.
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The peak output from Rajasthan fields of 8.75 MT a year would not support a 15 MT refinery at Barmer and a pipeline from Gujarat coast will have to be laid to transport imported crude.
Similarly, only a marginal amount of fuel produced by the refinery can be consumed in the refinery surplus northern India and an export line will have to be laid again to Gujarat coast for outward shipments.
Petroleum Secretary R S Pandey said the project will come up only if found economically viable. "If viability is there, yes there will be a project. But if no viability, there will be no project."
Former ONGC Chairman Subir Raha had proposed the refinery at Barmer as part of his plans to make the company fully integrated in the hydro-carbon value chain.
Initially a 7.5 MT refinery was proposed, but the size was found to be economically unviable and the capacity was doubled to 15 MT.
However, considering the fact that the peak oil production from the Cairn's Barmer field, where ONGC has 30 per cent stake, was only 8.75 MT, which may last a maximum of seven years, the refinery was considered unviable.