ONGC plans Rs 7,967cr capex for Rajasthan refinery

Oil and Natural Gas Corporation (ONGC) has proposed an investment of Rs 7,967 crore for setting up a 7.5 million tonne refinery at the site of the recent oil find in Rajasthan.

ONGC proposes to build the refinery in joint venture with UK-based Cairn Energy, which has discovered 2.5 billion barrels of oil reserves in Barmer district of Rajasthan.

"Given the physical properties of the crude, the only feasible and cost-efficient option is to refine the crude at the well-head that at the production site," ONGC-Cairn said in a joint proposal submitted to the ministry of petroleum and natural gas.

The proposal, put forward by R S Sharma, director (finance) of ONGC, and Kevin Hart, director (finance) of Cairn Energy, says that the Rajasthan fields would start producing oil from end-2007, and, till the refinery is commissioned, the oil be moved through a pipeline to Mundra port in Gujarat and then  shipped to Mangalore for processing by Mangalore Refineries and Petrochemicals (MRPL), a subsidiary of ONGC.

"Once the proposed refinery is commissioned, the same pipeline (Barmer-Mundra) will be used to transport imported crude oil (for processing at the refinery)," the proposal added.

It has also requested that ONGC and MRPL be nominated by the government as the purchaser of crude from the fields discovered by Cairn Energy.

IOC and HPCL have also claimed rights over crude found by Cairn Energy, and have proposed  to set up separate refineries in Rajasthan.