ONGC refinery in Rajasthan

To be set up at Rs 7,967 cr

Oil and Natural Gas Corporation has proposed setting up a 7.5-million-tonne refinery at Kausaria in the Barmer district of Rajasthan at Rs 7,967 crore.

In its proposal to the ministry of petroleum and natural gas, ONGC said it would like to set up the refinery as a joint venture with its subsidiary Mangalore Refinery and Petrochemicals Ltd and UK-based Cairn Energy.

Indian Oil Corporation and Hindustan Petroleum Corporation have also sought the ministry's approval for setting up the refinery. The ministry would grant one of the companies the right over the Cairn crude.

"It is requested that ONGC and MRPL be nominated by the government for the purchase of the crude under the terms of the production sharing contract," ONGC said.

ONGC proposed its refinery would be designed to handle the crude available locally and also the Arab mix in equal quantities. Cairn Energy has discovered 2.5 billion barrels of oil reserves in the Barmer district but considering its quality a blend ratio of 50 per cent is considered appropriate.

In a joint proposal submitted along with Cairn, the company said since the fields would start producing oil from end-2007, the oil could be moved through a pipeline to the Mundra port and processed at MRPL's existing refinery.

Once the proposed refinery is commissioned, the same pipeline could be used to transport imported crude oil for processing at the refinery. The investment requirement for the pipleine would be Rs 1,000 crore along with an energy cost of $0.30 a barrel.

The proposal said the refinery would produce 904,000 tonnes per annum of LPG, 211,000 tonnes of naphtha, 1.739 million tonnes of gasoline of Euro-III grade, 525,000 tonnes of kerosene, 120,000 tonnes of aviation turbine fuel, 2.469 million tonnes of diesel of Euro-III grade, 681,000 tonnes of coke and 71,000 tonnes of sulphur.

The ONGC board on April 12 approved a joint venture with equities shared among the three companies.