India's second largest refiner, Hindustan Petrol-eum Corporation Ltd (HPCL), is considering a tripartite venture for its proposed nine million tonne Punjab refinery at Bhatinda.
The management has offered 26 per cent equity to Oil and Natural Gas Corporation (ONGC), the upstream oil major. It is also in talks with Exxon Corporation of US for the same project.
HPCL has been forced to turn to ONGC and its old ally Exxon after its partner Saudi Aramco opted out of the project having signed an agreement with Royal Dutch/Shell, the Anglo-Dutch major.
Senior ONGC officials confirmed that "the corporation is discussing with the Hindustan Petroleum for equity participation in the Punjab refinery''. ONGC plans to become a fully integrated energy company by diversifying into downstream venture like oil refinery, setting up paraxylene project and power plants.
ONGC is presently evaluating the option of picking equity in either HPCL's Punjab refinery or BPCL's Lohagara refinery in Uttar Pradesh.
Sources say ONGC is favourably inclined towards Punjab refinery as it is scheduled to be commissioned much earlier by 2002.
HPCL is awaiting stage II clearance from Public Investment Board (PIB) for expanding the refinery capacity from six to nine million tonnes per annum. The Corporation is also considering further expansion of this refinery capacity to 12 million tonne.
Executives from ONGC and Exxon are already studying the detailed feasibility report of the refinery which is scheduled for commissioning by the end of IX five year plan. The refinery project estimated at Rs 15,000 crore is expected to include setting up of a 500 MW power plant based on refinery residuals.
The proposed project also envisages a 700 km long crude pipeline from Vadinar in Gujarat to Bhatinda.
A product pipeline is also under design from the site of the refinery to Jammu & Kashmir.
If talks click, the three companies, HPCL, ONGC and Exxon will pick up 26 per cent equity each in the refinery while the remaining will be offered to the institutions and public.
"With ONGC as equity partner, there will be an assured supply of crude while Exxon can provide expertise and financial might for the hinterland refinery," say sources. Although the refinery is based on imported crude, the refinery will be able to process indigenous crude from ONGC and change its configuration of petroleum products.Hindustan Petroleum had earlier proposed to set up a refinery on India's west coast in collaboration with Oman Oil Company. that prject had come unstuck due to Oman Oil's pull out. HPCL tried to rope in Exxon Corporation.but Exxon was disinterest.
HPCL is India's second largest refiner after Indian Oil Corporation. It is also the second largest lubricant company after IOC though Castrol India is breathing down its neck.
The details of the understanding with ONGC will be known later. HPCL is also trying torope in another partner for the project. Exxon has been sounded out but it will be some time before any conclsion is reached.
