HPCL talks to Total, Kuwait Petro for $3 bn refinery

KUALA LUMPUR: Hindustan Petroleum is in talks with Total and Kuwait to build a new $3-billion refinery in India instead of expanding the state-run refiner’s existing plant, its chairman said on Sunday.

HPCL has been in talks with major Total, Kuwait Petroleum International (KPI) and junior state oil producer Oil India over taking a stake in a planned doubling of the expansion at its Vizag refinery for more than six months, and officials had hoped to clinch a deal in April. But HPCL chairman and managing director Arun Balakrishnan said negotiations had shifted in favour of a new greenfield project, still in Vizag, that would have a capacity of at least 180,000 bpd. He also said the deal could mean building an aromatics petrochemical plant before the refinery.

“This would be more of a standalone set-up, not mixed up in the existing refinery,” Balakrishnan said in an interview ahead of the Asia Oil and Gas Conference. “Probably we may start with an aromatic unit and retrofit it with a refinery.” The refinery is expected to be completed in around 2011. HPCL is India’s third-largest refiner with capacity of about 260,000 barrels per day (bpd).

Government regulations in India make it easier for investors to join new ventures than to buy into existing state projects. The sector’s only major foreign investor is Chevron, which has a stake in a new export-oriented plant being built by Reliance Industries adjacent to its existing 660,000 bpd facility.

“We are very sure Oil India will be there plus these two companies, Total and Kuwait Petroleum. There is room for everyone. What size stakes will be worked out later,” Mr Balakrishnan said.