Industry & Economy
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Petroleum
ONGC plans toll-refining at MRPL's new refinery
Pratim Ranjan Bose
Kolkata
,
Oct. 25
ONGC is considering `toll-refining' options for its proposed 15 million-tonnes (mt) greenfield capacity addition at Mangalore Refinery and Petrochemicals Ltd (MRPL).
The proposed greenfield project will effectively raise MRPL's refining capacity to 30 mt. It is currently expanding the capacity of its existing facility to 15 mt.
Under toll-refining, the refiner lends the refining capacity to another company. The crude and the refined product belongs to the other company. The refiner has no responsibility except refining.
According to sources, ONGC is negotiating a long-term contract with a global exploration and production major, which will have its West Asian heavy crude refined at MRPL and buy back the refined product for supply to Asian markets.
While official sources are tight-lipped on the issue, it is learnt that initial discussions have taken place.
Keeping in mind the projected increase in equity oil share of ONGC Videsh (especially after Sakhalin-I would start producing at its full capacity next fiscal), MRPL had previously proposed brownfield capacity expansion up to 30 mt in phases. The project, however, was dropped later.
Apart from techno-economic constraints involved in expanding the 9.69-mt refinery to 30 mt, the tax breaks and other allied incentives available to greenfield projects have reportedly tilted the balance in favour of the latter.
Accordingly, the company has prepared a plan to set up a second unit at the existing MRPL premises. Since the project will share common facilities with the existing MRPL refinery, the cost is estimated to be between Rs 7,000 crore and Rs 8,000 crore, which is substantially lower than the average cost of such a project.
Keeping in view the increasing focus on refining (preferably its own crude), ONGC is considering the creation of the post of a full time director in charge of refineries. Apart from Mangalore, the group has already proposed setting up two refineries at Kakinada in Andhra Pradesh and Barmer in Rajasthan.
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