Hindustan Petroleum Corporation will have its hands full with refinery projects over the next three to four years.
While the nine million tonne Rajasthan refinery will be the new addition to the company’s portfolio, equal importance will be given to doubling capacity of the Vizag refinery to 18 mt by the end of 2016-17. The recently commissioned Bhatinda refinery will also see a marginal increase in capacity, from nine million tonnes to 12 mt.
At one point, the HPCL business model envisaged supply of products from Bhatinda to Pakistan but that may not take off for some time now. “In any case, there is enough and more demand coming in from the northern region which Bhatinda can cater to comfortably,” an industry official said. The commissioning of the Rajasthan refinery will only facilitate supplies further to this part of the country in the coming years.
Total capacity
If the script goes according to plan, HPCL will have total refining capacity of nearly 45 million tonnes (inclusive of the 6.5 mt from its Mumbai refinery) by FY’17 which will fit in perfectly with the size of its retail network. At present, there is a significant demand-supply mismatch which will be set right over the next four years.
It is also a million-dollar question if the Maharashtra Refinery, scheduled for commissioning in Ratnagiri district, will see the light of day. Even though the project was inevitable, given the state of the decades-old Mumbai refinery, its coastal location could have created issues on environmental clearances.
The MoU for the Rajasthan refinery was formalised on Thursday. While HPCL will be the single largest shareholder, with 51 per cent equity, the balance will be farmed out to the State government and Oil and Natural Gas Corporation. “A small portion could also be set aside for Engineers India,” a top industry official said.
Interestingly, the project has got feelers from a handful of other oil companies. However, with HPCL taking a substantial stake, it is unlikely if those interested would be open to a marginal presence, after ONGC and the Rajasthan government.
The project cost of nearly Rs 40,000 crore also factors in the petrochemicals complex.
HPCL-ONGC tie-up
It will mark the coming together of HPCL and ONGC for the second time, after Mangalore Refinery and Petrochemicals.
This was originally an HPCL-promoted project with the AV Birla group as partner; in a dramatic turn of events, ONGC entered the picture and snapped up the latter’s stake. Today, the upstream company has 72 per cent in MRPL, with HPCL accounting for 17 per cent.