IndianOil project on track
Kolkata   31-May-2010

IndianOil is reviving its Rs 22,300-crore petrochemical project at Paradip following interest from Kuwait Petroleum Corporation in picking up a stake.

"We had kept the petrochemical project on hold. Now, with the company's finances showing better prospects, we have to take a decision on when to start the project again," IOC chairman B. M. Bansal said.

Company officials said a final decision had not been taken on Kuwait Petroleum's stake.

Oil minister Murli Deora had offered the stake to Kuwait Petroleum in April when he met his Kuwaiti counterpart Sheikh Ahmad al-Abdullah al-Ahmad al-Sabah at a global energy meet in Mexico. Since then, IOC was in talks with Kuwait Petroleum.

Initially, the project was planned as a refinery-cum-petrochemical project at an investment of Rs 45,000 crore with participation from Kuwait Petroleum and Saudi Arabia's Saudi Aramco.

However, Kuwait Petroleum and Saudi Aramco did not pick up a stake as they had no marketing rights.

IOC divided the project into two phases. In the first phase, it decided to set up a 15-million-tonne refinery to be commissioned in 2012.

The petrochemical project was put on hold on the grounds of volatility in global crude prices, economic downturn and mounting revenue loss for selling fuels below costs.

B.N. Bankapur, director (refineries), said, "The timeline for the petrochemical project will be worked out soon. The IOC board has in principle agreed to restart the project. We had planned a one-million-tonne petrochemical plant. There will not be any change in the configuration of the plant."

The petrochemical complex was earlier scheduled to be completed in 2013.

IOC has so far invested Rs 6,000 crore in the project. While the entire project has been estimated at over Rs 50,000 crore, investment in the refinery will be Rs 29,777 crore. The PSU retailer is also planning a Paradip-Jatni-Jharsuguda-Ranchi-Raipur pipeline at an investment of Rs 2,000 crore.

Kuwait accounts for around 10 per cent of India's crude supplies, and Kuwait Petroleum's stake in the Paradip project can facilitate long-term supply contracts to the refinery.

The Orissa government has offered revenue concessions so that the project can be set up smoothly. The project has been delayed by more than seven years, which has led to cost escalations. The cost was initially estimated at Rs 15,000 crore.