ONGC, Shell at odds over refinery

The plant at Mangalore will modify bitumen sourced from ONGC's MRPL.

Oil and Natural Gas Corporation (ONGC) and Shell India's venture for setting up a bitumen refinery may stumble on the issue of marketing rights.

In an initial project report, Shell has claimed marketing rights for itself.

"We are not satisfied with some of the proposals of Shell in its initial report. The issue of marketing rights is one of them," an ONGC executive told Business Standard.

He said the ONGC would like to have marketing rights for products from the refinery but added that negotiations were on and a final decision would be taken soon.

The refinery is proposed to be set up at Mangalore in Karnataka and will produce high-grade bitumen for the domestic market. The plant will modify bitumen from ONGC's Mangalore Refinery and Petrochemicals Ltd (MRPL).

The two companies had entered into a tie up earlier this year and according to the memorandum of understanding, Shell can take an equity stake in the project and bring in technological expertise.

Shell, one of world's leading bitumen suppliers, is also planning to set up a mixing plant at Haldia in West Bengal for modifying bitumen from refineries to meet demand for higher grade varieties.

MRPL, which recorded its highest throughput of 11.848 million tonne in 2004-05, is also readying for expanding its capacity to 15 million tonnes.

ONGC is expected to invest Rs 35,000 crore on the expansion and has asked Engineers India Ltd to do a feasibility study on upgrading its refinery facilities.