BHATINDA, India, 14 August 2005 — India’s state-run Hindustan Petroleum Corp Ltd. will set up a new refinery with a foreign partner on the country’s east coast to process 300,000 barrels per day of oil, the company’s chairman told Reuters.
“We are thinking of at least 15 million ton a year along with a petrochemical complex near Visakhapatnam,” M.B. Lal said yesterday.
Lal spoke to Reuters in Bhatinda, a small town in northern Punjab state, where HPCL will build another new refinery which will process 180,000 bpd of crude oil. HPCL’s Bhatinda refinery as well as the proposed venture near Visakhapatnam will be built jointly with a foreign partner, Lal added. “We will definitely go for partners. It will be global players,” Lal said.
The firm already has a refinery in the coastal city but the fresh investment would be at a new site. The construction schedule is yet to be decided.
HPCL officials said the company was in talks with several global firms such as Saudi Aramco, Petronas, and France’s Total. Bombay-based HPCL is also in the race to build a refinery in the north western state of Rajasthan to process crude oil discovered by Britain’s Cairn Energy.
State-run explorer Oil and Natural Gas Corp Ltd. is also keen to build the refinery in Rajasthan with Cairn Energy. A decision on which firm will construct the refinery rests with India’s oil ministry. India already has a surplus refining capacity and has been exporting oil products since 1999, when Reliance Industries Ltd. set up its Jamnagar refinery that now processes 660,000 bpd of crude oil.
Reliance Industries announced this month it would double its refining capacity by 2008 with an investment of $5.8 billion. A shortage of global refining capacity after years of underinvestment has helped crude oil prices scale $66 a barrel this year and extended the cyclical industry’s two-year profit boom after almost a decade of mediocre returns.
If demand continues to expand at about 2 percent a year, as predicted this year and the next, refiners would have to add over 10 million bpd of capacity by 2010 just to keep up. Reliance is contributing barely 5 percent of that. Apart from Reliance and HPCL, several Indian refiners are adding capacity.
