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Pratim Ranjan Bose

Kolkata , March 21

ONGC is planning to expand the capacity of Mangalore Refineries and Petrochemicals Ltd (MRPL) to 15 million tonnes. The 9.6-million tonne refinery currently produces close to 12 m.t. of refined products. The expansion will also add new product lines.

The capacity expansion of MRPL is clubbed with the proposed methane (C2) and propane (C3) extraction plant at Mangalore using LNG as feedstock. The methane produced will be used by MRPL as fuel. The combined project cost is pegged at close to Rs 3,000 crore. ONGC has already finalised a Rs 900-crore investment in the C2-C3 facility, also using LNG, at Dahej in Gujarat.

The two C2-C3 extraction projects coupled with capacity expansion at MRPL will leave a sufficient quantity of high quality naphtha and propane with the ONGC group, which can be used only in the petrochemicals sector. The company had previously said that it would be finalising investment in the proposed petrochem project at Dahej by June-July this year.

"We are seriously considering expanding the capacity of MRPL and setting up the C2-C3 plant at Mangalore. We have already launched a feasibility study and are likely to take some decision in the next 2-3 months," Dr A.K. Balyan, Director of ONGC, told Business Line.

The feasibility study is being carried out by Engineers India Ltd.

Last year, the company had put the capacity expansion plan for MRPL on hold. When asked about this change in stance, Dr Balyan indicated that the capacity expansion plan was revived in view of the company's foray into the retail sector.

"Right now, MRPL is dependent on others for marketing its products, which often leads to lower returns. Also, we are planning to add some very interesting product lines during the capacity expansion programme," he added.

The refining capacity expansion is also seen as a part of ONGC's focus on crude exploration. "We are expecting a shortfall in refining capacity beyond 2007 and we are, therefore, getting ready to bridge the gap."

On the C2-C3 extraction plant at Mangalore, Dr Balyan said that the company had put the project on the fast track "The required Gazette notification by the Karnataka Government on formation of the SEZ is expected anytime. It will give us a tax-break. Once the notification comes, we will start working on LNG import and the extraction project."

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