Phase 1 of Nagarjuna Oil's Tamil Nadu refinery on fast track to completion

“Plant inauguration – 120 days left,” reads a welcome board at Nagarjuna Oil Corporation Ltd's refinery in Cuddalore. With the March 1 deadline fast approaching, nearly 6,000 labourers, mostly from north India, are working round the clock to ensure the refinery starts on time.

Five months from now, the refinery hopes to commission the crude distribution and vacuum distribution units.

The refinery, which is being built over 1,600 acres, located 155 km south of Chennai, between Cuddalore and Chidambaram, is the largest private sector investment in Tamil Nadu, with Rs 10,000 crore being invested in the project. It is vital for the State to become self-sufficient in petroleum products such as automobile fuel, LPG and bitumen, Mr Ramasundaram, managing director and CEO of the company, said.

With half of the State's petroleum requirement coming from refineries located in other States, the retail price of petroleum products is higher due to additional transport costs, he said.

In the first phase, the company will refine 6 million tonnes of crude petroleum a year. In the initial stage, crude will be imported from Nigeria and in the later stage from West Asia.

“We are on target to commission the first phase,” said Mr Ramasundaram. “It has been a long wait for all of us.” The project was planned in July 2001 but work started in 2006 after getting all the clearances, he said.

The second phase of adding a refining capacity of 9 million tonnes is likely to be taken up in 2014 after the first phase of operations stabilises. This will cost nearly Rs 18,000 crore, said Mr Ramasundaram, a former officer of the Indian Administrative Services of the Tamil Nadu cadre.

The next milestone will be to commission the naphtha stabilisation unit.

The Government of India has declared NOCL as the anchor unit for its Petroleum, Chemicals and Petrochemicals Investment Region in the Cuddalore-Nagapattinam region. This will cause investments of around Rs 13,000 crore in infrastructure around the refinery, he said.

In NOCL, the Nagarjuna group holds a 51 per cent stake in the refinery and Tata Sons has a 30 per cent stake. The remainder is held by the German contractor Uhde, Cuddalore Port Development and Tamil Nadu Industrial Development Corporation.

The Hyderabad-based Nagarjuna Group relocated a fully functional refinery from Woerth in Germany to Cuddalore. The direct investment by the group in the plant is Rs 7,160 crore. In addition, various captive utilities such as the port, storage tanks, power plant and marketing terminal will involve an investment of nearly Rs 2,900 crore to be invested in various build, own, operate and transfer options, he said.

The refinery complex also has marine infrastructure, including a single-point mooring for crude oil handling in very large crude carriers and a jetty for finished product handling. Since the depth near the berth is around 4 m, large ships requiring deeper waters will be anchored 7 km from the coast and the crude will be transported through submarine pipes. The refinery will have a berth to handle ships of 50,000-60,000 tonnes to evacuate products from the refinery, said Mr Ramasundaram.

COMMENT NOW