ONGC plans 7.5 mn tonne refinery at Rajasthan

Oil and Natural Gas Corporation (ONGC) has announced it would set up a 7.5 million tonne-capacity refinery at Barmer oil fields in Rajasthan at an investment of Rs 9,000 crore.

Crude from the Barmer oil fields, which the company dug in collaboration with UK's Cairn Energy, has been allotted to ONGC-MRPL (Mangalore Refinery and Petrochemicals) for refining petroleum oil with 50 per cent equity to Cairn, said ONGC chairman and managing director Subir Raha.

The refinery would be ready by 2006 end, and petroleum products made available 36-40 months after the project takes final shape, he added.

Cairn-ONGC has explored petroleum oil reserves of more than 300 million tonne in Barmer-Sanchor basin near Bothia village. They estimated that these discoveries have the potential to yield oil for at least 25 years.

He said the refinery would produce 7.5 million tonne of oil annually, and if the reserves were exhausted, the company would maintain supply by sourcing crude from its affiliates in foreign countries and offshore centres.

Oil from the Rajasthan refinery would be transported through pipelines to coastal areas and would also be provided to consumers, he said.

ONGC-MRPL would also pay royalty to the state government as per the norms, Raha said.

The refinery will come on stream in 2009-10 and approximately half of production is destined for domestic consumption and the remaining 50 per cent will be for export.

The bid comes despite Sonangol blocking ONGC Videsh's (OVL) successful bid for acquiring Shell's 50 per cent equity in block 18. OVL and shell had reached agreement on the block but the deal could not go through as Sonangol exercised its pre-emption right to block the sale.

OVL also plans to bid for exploration blocks in the ultra deepwater and deepwater in the congo and kwanza basins that are likely to be offered towards end 2005 or early next year.