Shell, ONGC to set up bitumen refinery

Mangalore plant to cater to domestic market.

Shell India and Oil and Natural Gas Corporation will set up a bitumen refinery at Mangalore in Karnataka. The refinery will produce high-grade bitumen with an eye on the domestic market.

ONGC executives said yesterday the two companies would finalise the details of an agreement next week. "Shell may take an equity in the project and also bring in technology," said an executive.

ONGC might float a separate company to execute the project. The details of plant capacity and investments would be worked out once the two companies had an agreement, said executives.

Shell is one of the world's leading bitumen suppliers with an extensive global network. The company is also planning to set up a mixing plant at Haldia in West Bengal for modifying bitumen.

Bitumen will be sourced from refineries and modified to meet the demand for higher-grade varieties of the product. Shell already has a range of bitumen products in India. The plant at Mangalore will modify bitumen sourced from ONGC's Mangalore Refinery and Petrochemicals Ltd (MPRL). The new company may also market the product.

MRPL, which recorded its highest throughput of 11.848 million tonnes in 2004-05, is also readying for expanding capacity to 15 million tonnes with a capital investment of Rs 65,000 crore. MRPL has asked Engineers India Ltd to do a feasibility study on upgrading refinery facilities.

Explaining the reason behind the tie-up, executives said the country's bitumen requirement had increased following large-scale road construction activities. Bitumen production increased to 3.3 million tonnes in 2004-05 from 2.72 million tonnes in 2000-2001.

Until a few years back, India was heavily dependent on bitumen imports but has now started exporting the product in small quantities. "The demand will increase significantly since the government's highway programme is yet to reach intensify," said an executive.