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JOINING HANDS: The Minister for Petroleum and Natural Gas, Mr Mani Shankar Aiyar, and Lord John Browne, Group Chief Executive, BP, flanked by Mr John Manzoni (left), Chief Executive of Refining and Marketing, BP, and Mr M.B. Lal, Chairman, HPCL, in the Capital after signing a letter of intent to form a refining and marketing joint venture on Thursday. - Ramesh Sharma

New Delhi , Oct 13

HINDUSTAN Petroleum Corporation Ltd (HPCL) today signed an agreement with BP plc (formerly known as British Petroleum) to form a 50:50 strategic joint venture partnership that would operate in the oil refining and marketing sector in India.

This could be India's first significant multinational participation in the refining sector. One of the joint venture's major projects will be the construction of HPCL's Rs 12,000-crore Bhatinda refinery project in Punjab.

Soon after signing the letter of intent for the venture, the HPCL Chairman and Managing Director, Mr M.B. Lal, told reporters that the equity structure of the refinery would be worked out in a month's time. He, however, indicated that the two companies would hold a minimum 26 per cent stake each in the refinery project, which is being implemented by a new company, Guru Gobind Singh Refineries Ltd. The 9-million tonnes per annum (180,000 barrels a day) refinery project would be completed by 2009, he said.

Coinciding with the visit of the BP Group Chief Executive, Lord John Browne, the letter of intent was signed by Mr John Manzoni, BP's chief executive for refining and marketing, and Mr M.B. Lal, in the presence of the Petroleum Minister, Mr Mani Shankar Aiyar. Lord Browne said on the occasion that "India is one of the fastest growing energy markets in the world and we have been evaluating a range of potential areas where BP might become involved".

Besides the Bhatinda project, the partners would develop joint marketing activity, including establishment of a retail service station network, in preparation for the refinery going on stream in 2009, Mr Lal said. The two companies — BP and HPCL — would now establish a working group to monitor the progress of the joint venture and examine other opportunities, including some outside India, he said.

The joint venture would also assist in crude selection and supply to the other refineries of HPCL. It would also provide HPCL opportunities to acquire or participate in the refining and marketing assets that the BP Group may identify for its overseas portfolio.

Asked about the kind of tie-up BP was eyeing, Lord Browne said that as BP was interested in integrated projects this partnership offered a good opportunity. "It is a long-term partnership," he said.

On whether BP would consider giving HPCL access to any of the markets where the British firm operated, Lord Browne categorically said, "the agreement is only for India".

BP was also keen to participate in the deep-sea exploration of the Krishna Godavari basin in the Bay of Bengal.

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