Crude oil refining company Chennai Petroleum Corporation Ltd will be migrating towards cleaner gas fuel to power its refinery at an outlay of around Rs.500 crore in couple of years time, said a senior official.
The company closed the first quarter of the current fiscal with a net profit of Rs.924 crore as compared to Rs.510 crore posted during the corresponding quarter of 2014-15.
"Preliminary detailed engineering study has been completed at an outlay of around Rs.100 crore. We will proceed once confirmed source of liquefied natural gas (LNG) is finalised," S.Venkataramana, director (operations) told IANS here on Monday.
He said the company is waiting for the Indian Oil Corporation Ltd's (IOC) LNG terminal being set up here.
"IOC's LNG terminal is expected to be ready early 2018. We will have to start our work on migration to gaseous fuel in 2016," Venkataramana said.
Chennai Petroleum is currently using low sulphur fuel to run its refinery and once the fuel is changed to gas based, then there will be handsome saving in the fuel cost, he added.
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According to B.Ashok, chairman of Indian Oil Corporation (IOC), the LNG terminal is expected to be ready by 2018.
He said the Rs.5,000 crore project has three major components - setting up of refrigerated tanks, re-gasification facilities and marine facilities (for LNG import).
"We have placed the contracts for building refrigerated tanks and re-gasification facilities," said Ashok, who is also the chairman of Chennai Petroleum, a subsidiary of IOC.
Queried about the impact on the resolution of Iran issue by the western countries, Ashok told reporters here: "We are cautiously optimistic. The beneficial impact will be that Iran will be one more source of crude oil."
Speaking about the first quarter results of Chennai Petroleum, he said the company posted higher profits due to better through-put, lower crude prices and higher distillate production.
Ashok said the price of crude oil is likely to hover around the current levels.
According to Gautam Roy, managing director, Chennai Petroleum, the gross refining margin (GRM) during the quarter ended June 30, 2015 was $10.99 per barrel as against $1.88 per barrel during the corresponding period of last fiscal.
The blended average price of crude for Chennai Petroleum is around $61 during the first quarter of the current fiscal, he said.
Meanwhile IOC will be investing around Rs.1,000 crore in Chennai Petroleum in the form of preference share capital.
According to Roy, the company is implementing a capital expenditure programme involving an outlay of Rs.1,392 crore towards resid upgradation and laying of new crude oil pipeline.