IOC to modernise refineries overseas

Special purpose vehicles for projects in Africa, Asia

Indian Oil Corporation (IOC) is planning to take up the modernisation of Eden (Yemen) and Mombassa (Kenya) refineries, besides entering into a memorandum of understanding with Nigeria's Edo province for setting up a refining facility.

IOC proposes to create special purpose vehicles to undertake the modernisation and revamp projects, including those in Iran and Libya. The funding mechanism for the projects, estimated to cost $4 billion, will be worked out separately, company executives said.

The MoU with Edo is expected to be signed next month, which would be followed by negotiations for concessions, including getting equity oil in the province, a senior company executive told Business Standard.

The IOC board has already cleared the proposal and the oil major is already in the process of bidding for the modernisation of another Nigerian refinery.

IOC has also been offered two refinery modernisation projects in Libya at an estimated cost of around $1.2 billion. The modernisation would be done on a joint venture basis for which IOC has submitted the expression of interest and will undertake due diligence shortly.

"We can even acquire a majority stake in these two joint ventures. With Libya being close to Europe, the upgrade of the two refineries will help us in getting access to the European markets," an IOC executive said.

The company is also expecting the award of modernisation projects for Teheran and Tabriz refineries in Iran on nomination basis. The $1 billion project is close to finalisation and IOC is in the reckoning with Engineers India Ltd.

A crude swap arrangement will also have to be worked out involving the availability of Iranian light, in return for Caspian crude of around 240,000 barrels per day that is currently available.

In case of the Eden refinery, which produces large quantities of furnace oil, the project expected to be in the region of $500 million, entails upgrade for the production of gas oil, which will be marketed in Yemen itself, since the country is deficient in gas oil.

In case of the Mombassa refinery, where negotiations are at an early stage, the company is going to commence technical feasibility studies shortly.

---

Well-oiled forays

• IOC proposes to create special purpose vehicles to undertake the modernisation and revamp projects.
• The funding mechanism for the projects, estimated to cost $4 billion, will be worked out separately.
• IOC is planning to take up the modernisation of Eden and Mombassa refineries, besides entering into an MoU with Nigeria's Edo province for setting up a refining facility.
• IOC has also been offered two refinery modernisation projects in Libya at an estimated cost of around $1.2 billion.
• The company is also expecting the award of modernisation projects for Teheran and Tabriz refineries in Iran on nomination basis.