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New Delhi June 26 A day after it said that economics of setting a small size refinery in Rajasthan were not favourable, state-owned ONGC on Tuesday said that the proposal to build a 7.5-million-tonne per annum (mtpa) refinery to process Cairn India's crude oil was still under consideration.

The company, however, maintained that an alternate plan for a 4-mtpa refinery was found to be uneconomical.

Due diligence

In a statement issued here the company said that ``The original project for a 7.5-mtpa refinery is still undergoing due diligence between ONGC and Government of Rajasthan for arriving at an agreed fiscal support by the State Government for achieving the economic viability of the project. Besides the above proposal, a parallel exercise was undertaken by ONGC to evaluate the viability of downsizing the refinery capacity with a view to containing the capital expenditure."

A reduction in refining capacity was being explored to process the crude oil near the production site, eliminating the cost for laying a pipeline for exports and extending the availability of the Barmer crude at a reduced rate of production of 80,000 barrels a day, close to the economic life of the refinery.

Viability

"The economic evaluation for the 4-mtpa refinery in view of the crude evacuation pipeline is not working out to be viable," the release said. Since a decision on the original size of the refinery was likely to take some time, a decision on laying an oil pipeline from Barmer to Gujarat coast was likely this week, it said adding that "substantively, the proposal for the development of 7.5 mtpa refinery, which is independent of pipeline proposal, is under serious consideration," ONGC said.

Cairn India is to begin production of crude oil from Rajasthan fields in first quarter of 2009 with planned peak output of 1.5 lakh barrels per day.

More Stories on : New Projects | Petroleum | Oil & Natural Gas Corporation Ltd

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