The Hindu : Business : Five-way partnership for petro complex in Vizag

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Friday, Oct 19, 2007
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Five-way partnership for petro complex in Vizag

Mittal, Total, HPCL sign MoU for feasibility study

To set up $6-b refinery-cum-petrochemical hub
Equity structure
will be decided
after study

NEW DELHI: After having joined hands to set up a Rs. 19,000-crore oil refinery at Bhatinda in Punjab, NRI steel baron Lakshmi N. Mittal on Thursday signed an agreement with Hindustan Petroleum Corporation Limited (HPCL) along with French oil major Total and GAIL (India) for setting up a $6-billion refinery-cum petrochemical hub at Visakhapatnam in Andhra Pradesh.

The five-way partnership for the 15-million tonnes a year refinery and one-million tonnes olefins and aromatics complex will also feature state explorer Oil India Limited. “We have signed a memorandum of understanding (MoU) for undertaking a feasibility study of the mega complex,” HPCL Chairman and Managing Director Arun Balakrishnan told newsmen here.

Mr. Mittal has already picked up 49 per cent stake in HPCL’s $3.6-billion Bhatinda refinery and this would be Mr. Mittal’s maiden foray into petrochemicals. Total will take the lead in conducting the feasibility study for the refinery project, while GAIL would take charge of the study of the petrochemical unit.

Mr. Balakrishnan said the exact equity structure and project finances would be decided only after the feasibility studies were completed.

GAIL Chairman and Managing Director U. D. Choubey said the petrochemical business for the company ranked second in the order of priority after gas. This hub was in the plans of the company as it was felt that there was a need for a mega petrochemical plant in the South to meet the demand in the region, he added.

Arcelor-Mittal Executive Vice-President Sudhir Maheshwari said the Mittals were keen on rapidly expanding in oil and gas exploration as well as the downstream refining and petrochemical business.

Mr. Balakrishnan did not give any timeframe for the new mega refinery-cum-petrochemical complex stating that everything depended on the feasibility report. About 2,500 acres near HPCL’s existing 7.5-million tonnes refinery at Visakhapatnam has been acquired for the project. The plant in all probability would come up in a special economic zone and the fuel produced by the refinery would be exported to markets in Southeast Asia and West Asia.

While the refinery would be built to process sour and heavy crude, which are cheaper than low-sulphur sweet crude oil, the petrochemical plant may use the naphtha produced in the refinery as feedstock.

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