AP gets Rs 5,500-cr export-oriented refinery ONGC-MRPL also to set up SEZ at Kakinada with IL&FS

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The ONGC Chairman, Mr Subir Raha (right), with the Andhra Pradesh Chief Minister, Dr Y.S. Rajasekhara Reddy, announcing the new projects in the KG basin, in Hyderabad on Saturday . - P. V. Sivakumar
The ONGC Chairman, Mr Subir Raha (right), with the Andhra Pradesh Chief Minister, Dr Y.S. Rajasekhara Reddy, announcing the new projects in the KG basin, in Hyderabad on Saturday . - P. V. Sivakumar

Our Bureau

Hyderabad, Sept. 3

OIL and Natural Gas Corporation Ltd (ONGC), its subsidiary MRPL and consortium partners, today announced plans to set up a Rs 5,500-crore export-oriented oil refinery at Kakinada in Andhra Pradesh along with a Rs 1,500-crore special economic zone, with potential to go up to Rs 3,000 crore.

A MoU was signed here today by representatives of the Andhra Pradesh Government and ONGC, MRPL, IL&FS and Kakinada Sea Ports Ltd, for the creation of a special purpose vehicle.

Addressing a press conference here, the Chairman of ONGC, Mr Subir Raha, in the presence of the Chief Minister, Dr Y.S. Rajasekhara Reddy, said that the 7.5-million-tonne capacity refinery project will achieve financial closure shortly and by November work on the refinery initiated.

It will take 36 months to begin production, which is a relatively shorter time for a refinery. This would be possible as ONGC has negotiated with an European company Pepco for plant and machinery. All it needs is to shift and erect it at Kakinada.

Describing this project as the single largest investment in the State, Dr Reddy nominated the managing director of APIIC to serve as an escort officer for the project. While the State through APIIC will hold a token three per cent stake in the form of land, MRPL (26 per cent), ONGC (20 per cent), IL&FS (51 per cent) would be other stakeholders in the Kakinada special economic zone. The refinery would be provided 1,000 acres and the SEZ 10,000 acres.

Mr Raha said, "We have received in-principle approvals and will develop this as the nodal refinery in the East. This refinery will produce oils that comply with the latest emission norms and would be first project in the world to have the capability to process bio fuels ground up. Extracts from Jatropha and Sweet sorghum would be used to produce ethanol to blend in the fuels."

Referring to the gas find, Mr Raha said ONGC would commission its first deep water gas exploration in April 2006 in Andhra Pradesh. Referred to as G1GS 15, this would be first digital oilfield. The Krishna-Godavari basin has great potential but refrained from hazarding numbers and the capacity.

On the recent PetroKazakh bid, Mr Raha said, "We win some, lose some and continue to tap new opportunities."

ONGC plans to expand the online crude processing capacity of the Tatipaka refinery by 2007.

This would be ONGC's third SEZ, the other two being at Dahej in Gujarat and Mangalore. Farmers would be supported to go in for Jatropha and Sweet Sorghum cultivation in the region.

The SEZ investment would be initially Rs 1,500 crore and would be ramped up to Rs 3,000 crore. Its creation would help tap downstream industries such a petrochemicals, metallurgy, fertilisers, power generation among others. ONGC would also consider other options, he explained.

(This article was published in the Business Line print edition dated September 4, 2005)
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