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M. Ramesh

Chennai , Dec. 16

CHENNAI Petroleum Corporation Ltd (CPCL) has completed the mechanical part of its expansion project. The project will raise the refiner's capacity from 7.5 million tonnes per annum (mtpa) to 10.5 mtpa.

The next step is "commissioning activities" - technical operations to make the plant ready for trial production. This could take about 15 days to complete, Mr S.V. Narasimhan, Managing Director, told Business Line.

From January, the company will get petroleum products from the new refinery.

However, one part of the expansion project - the hydrocracker unit that helps extract more higher value products from crude oil - will be completed only by April.

Till then, Chennai Petroleum will be able to process only about half-a-million tonnes of additional crude. From the next fiscal, CPCL will derive full value from the expanded unit.

Meanwhile, falling demand for naphtha has caused CPCL to look at options for converting the refinery derivative into petrol. The company is in talks with its technology supplier, UOP of the US, in this regard.

A team from UOP was here recently to look at the technology options for the modification.

Mr Narasimhan said that the modification would cost Rs 30-Rs 40 crore. The company may take up the modification project next year itself.

However, for the short term, CPCL has written to its parent company, IOC, stating that it might be more rewarding to export naphtha rather than supply domestically.

Supplying to domestic fertiliser units such as Madras Fertilizers is as remunerative as exporting because of the negotiated price.

But if the demand from these units comes down, CPCL would be better off exporting it because although naphtha is sold at the same price to both domestic and overseas customers, the company would get advance licence on its exports. It can then use the licence to import crude duty-free.

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