HPCL plans Rs 2500 cr LNG unit at Mangalore

Hindustan Petroleum Corporation(HPCL) is in talks with Mangalore Refineries and Petrochemicals (MRPL) to set up a five million tonne per annum liquefied natural gas (LNG) terminal at Mangalore at an estimated cost of Rs 2,500 crore.

M B Lal, chairman and managing director of HPCL, said: "The company is looking at the gas market and was working on a concrete action plan. We are in discussion with MRPL to set up LNG terminal. In the venture, HPCL can market the LNG while the procurement of the product (LNG) will be done by MRPL and Oil and Natural Gas Corporation (ONGC)."

Lal was speaking on the sidelines of the launch of a new diesel engine oil 'Champion' here today.

Overall, the country consumes close to 70 million square cubic metre of gas (mmscm) as against the immediate requirement of 120 mmscm of gas.

Lal claimed that there is immediate need of gas and the market could develop even further with several power projects coming up in the southern states.

For LNG, the MRPL-HPCL combine is scouting for suppliers in the Middle East. "We have initiated talks for supplies from Yemen, Qatar and even Oman for LNG," he added.

Rs 2,000 cr upgrading plan: With high volatility in crude oil prices, HPCL has decided to invest an additional Rs 2,000 crore in upgrading its refineries, particularly the Visakhapatnam refinery to process "more of sour crude which is cheap".

This investment will be in addition to the Rs 2,400 crore spent on upgrading the refineries to Euro -III norms. Lal pointed out that "these changes in the processing will take care of the surges in global crude prices. Once implemented, the refinery at Visakhapatnam will be able to process cheap crudes from 2007."

The volatility in crude oil prices has also forced the company to take a relook at its risk management policy. "With crude oil marketing remaining volatile, we have to look at risk management with a shorter term perspective like 2-3 months," he added.

With competition hotting up in the retail segment particularly in marketing of diesel and petrol, HPCL is not only expanding its retail reach but is also consolidating.

On one hand, it is adding 800 retail outlets across the country and on the other, it is busy re-siteing non-performing petrol stations.

Lal claimed that "petrol station with low throughput lower than 100 kilo litres have been re-sited and about 150 such retail outlets have been relocated last year." The average throughput from a retail outlet is more than 275 kilolitres.

Moreover, HPCL is spending Rs 1,500 crore over a period of three years tin upgrading its existing retail outlets under 'Project Aakarshan'.

Eyes partner for Prize Petro

Hindustan Petroleum Corporation (HPCL) is scouting for partners in Prize Petroleum Ltd, a company floated in 50:50 joint venture with several financial institutions to enter exploration, production and development of oil and gas fields.

Financial Institutions have now decided to exit the venture. "We are looking at several companies who have interest in entering the exploration and development of oil blocks in India, " said MB Lal, chairman and managing director of HPCL.

Prize Petroleum has three marginal onshore fields from ONGC and has bagged one exploration block under New Exploration Licensing Policy (NELP) -IV.