Saudi Arabia's Saudi Aramco and Kuwait Petroleum Corporation are in talks with Hindustan Petroleum Corporation (HPCL) to replace India-born billionaire Lakshmi N Mittal in the planned $10 billion refinery-cum-petrochemical project at Vizag in Andhra Pradesh.
HPCL is in talks with the world's largest oil producer, and Kuwait's national oil company for supply crude oil and a possible equity partnership in the project, an industry source said.
"The negotiations are at a standstill because of certain conditionalities put by both Saudi Aramco and KPC," he said.
While Saudi Aramco has sought a minimum of 30 per cent stake in the 15 million tonnes refinery project, KPC is insisting on being the sole crude supplier and output being sold locally. Both the conditions are unacceptable to HPCL.
State-run firms and private investors were to hold 49 per cent stake apiece in the five-way alliance project. So, HPCL, gas utility GAIL and Oil India were to hold 49 per cent while Mittal Investment Sarl and French energy giant Total were to hold an equivalent stake. The remaining two per cent was to be offered to financial institution like SBI Caps.
The source said it was difficult to accommodate Saudi Aramco's request as Total, which is most keen on the project and is doing pre-feasibility study, would not like to give out majority share to the Saudi firm.
Similarly, it would be difficult for the project not to export the fuel it makes as sought by KPC which is building a refinery at home to cater to the demand in the region.
Mittal put its investment in the project on "hold" due to global economic slowdown, the source said adding HPCL and Total are likely to make an investment decision in March 2009.
