ONGC may set up Kakinada refinery

Kakinada port may finally get a greenfield refinery, and it is likely to be bigger than originally planned.

Minister for Petroleum Murli Deora today told Parliament that according to the directions from the prime minister, he has asked Oil and Natural Gas Corporation (ONGC) to go ahead with the project to double the original scale to 15 million tonne per annum (mtpa) to make it viable.

ONGC had originally planned to set up a 7.5 mtpa export-oriented refinery in Kakinada, and also signed a memorandum of understanding with the Andhra Pradesh government to acquire land for the project. However, ONGC later decided to dump the project as studies carried out by Engineers India indicated a refinery of that scale may not be viable.

"Capacity of 15 mtpa makes the refinery a little viable. That does not mean that we will go ahead with the project as yet," a senior ONGC official said. "The petroleum minister has asked us to reconsider the refinery's viability."

The official said that market studies and refinery operations have to be looked at before a final decision is taken. "The Asian market is already squeezed. We have to find a market for the products from the refinery in Europe," he added.

Moreover, ONGC is worried that the refinery sector may be getting too cluttered. "There are many refineries coming up. We do not want to put up a refinery that has no market," the official said.