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Gaurav Raghuvanshi

Vadodara , July 14

INDIAN Oil Corporation has said that a detailed feasibility study on its proposed 15 million tonnes per annum refinery and petrochemicals complex at Paradip in Orissa would be ready by August and it hopes to commence construction soon.

"We will get the feasibility study by August. We are committed to completing the project by 2009. The project is expected to cost nearly Rs 15,000 crore," the IOC Director (Refineries), Mr Jaspal Singh, told Business Line here on Wednesday.

The company is aiming at the export markets in China and South-East Asia for both refined products and petrochemicals from the proposed refinery. Interestingly, IOC has been going slow on the Paradip project for the last four years in view of a glut in the refining industry in the country. But with continued demand, the company has decided to go ahead with the project with funds coming mostly from internal accruals. The company's focus right now is on the Panipat refinery, where it has several streams of products.

At Panipat, an integrated paraxylene and purified terephthallic acid (PX/PTA) unit is expected to go on stream by October at a cost of Rs 5,100 crore. In addition, a naphtha cracker and downstream polymer units at a cost of Rs 6,300 crore would be ready by 2008, Mr Singh said.

"We propose to invest Rs 25,000 crore over the next eight years in our petrochemicals business. At the same time, we want to focus more on refining the heavy grade, high sulphur crude oil that has the potential to increase refining margins," Mr Singh said.

The average refining margins for IOC have gone up from $5.3 per barrel last year to $6.3 at present and are expected to stay "robust" in the future.

With the difference between heavy and sweet crude ranging at $5-6 per barrel, the company feels it can further increase its refining margins by processing more of the cheaper high-sulphur, heavy crude.

Till the recent upward revision in petrol and diesel prices, all refiners had been taking a hit on their profitability in spite of higher refining margins.

"But I feel that (depressed petrol and diesel prices) was a temporary phenomenon and we will soon have product prices that reflect international price movements of crude," he said.

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