Updated: August 23, 2019 4:47:15 pm
Hindustan Petroleum, which is a minority partner in the proposed West Coast Refinery, feels Saudi Aramco, the single largest shareholder in the 60 million tonne project, partnering with Reliance will have no impact on the now-stuck project.
Mukesh Surana, the chairman of the ONGC-run HPCL, also said the work on the controversial Rs 4 trillion refinery and petrochemicals project is on track. It can be noted that the location for the project is yet to be identified after the one identified earlier in Ratnagiri was abandoned due to public and political protests last year.
Speaking to reporters here late Wednesday evening after the AGM, Surana said Aramco’s decision to pick up a 20 per cent consideration in Reliance’s Jamnagar refinery for USD 15 billion could be part of the world’s largest oil company’s strategy to secure a long-term client for its crudes.
“It will not be right on my part to comment on what Aramco’s strategy is. But my understanding is that they have got the capability to do both the projects (West Coast Refinery and Reliance). So the deal that they have gone into with RIL, I don’t think it will have any apparent impact on other discussions that are going on,” Surana said. Three state-owned oil majors–Indian Oil, Bharat Petroleum and HPCL–have entered into an agreement with Saudi Aramco under which the Saudi oil major has picked up 51 per cent stake in the refinery project.
Aramco, in turn, has roped in Abu Dhabi National Oil Company as a minority partner for the 60 million tonnes refinery-cum-petrochemical complex. But some analysts view Aramco going with RIL due to the massive cost escalation in the West Coast project, which has jumped by Rs 1 trillion to Rs 4 trillion and also there is no guarantee that the project will take off at all.
The three state-owned companies will own 49 per cent in the project, of which 25 per cent will be held by IOC and the rest equally between the other two.
Earlier, the project was proposed to come up at Nanar, a village in Ratnagiri district, some 400 km south of Mumbai. However, due to continued opposition from the locals as well as the ruling ally in the state, Shiv Sena, the Devendra Fadnavis-led government decided to relocate the project to another location. Fadnavis had, reportedly, recently said the new site will be in the neighbouring Raigad district, about 100 km south of the financial capital.
But the location is yet to be finalized. Reliance recently announced its plan to sell 20 per cent stake in its refining and petrochemicals business for USD 15 billion to Aramco, which would also supply 5,00,000 barrels of crude per day to the twin refineries in Jamnagar.
“As far as Aramco is concerned, they will be happy to have a destination for their crude for a long-term basis and the buyers will also be happy to have a long-term arrangement for an assured source of supply. So to that extent, I don’t see any contradictions in the two partnerships,” Surana said. When asked about the timeline for the West Coast project, he said, “I don’t think we can give a timeline.
This refinery will take five years to be completed but the final investment destination has to be taken.
“The configuration study work is in progress and multiple cases are being worked out depending on the changing demand-supply situation and once that is frozen there can be a comprehensive case.” Whether the implementation of the BS-VI fuels from next April will increase the prices, he said, “all the refineries are investing for this and all refineries are hydrogen dominated units and hydrogen is a costly commodity.
“There will be a cost to refineries and we would definitely like that there will compensation by way higher prices. But to what extent, we need to see,” he said.
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