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Updated: April 7, 2013 11:24 IST

CPCL gets green nod for residue upgradation project

N. Ravi Kumar
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A.S.Basu
The Hindu A.S.Basu

The Union Ministry of Environment and Forests has given its clearance for the residue upgradation project of Chennai Petroleum Corporation Ltd. (CPCL).

The project will come up at the company’s Manali refinery near Chennai.

Investment

Proposed two years ago, the project, promising multiple benefits to the standalone refinery, would be the first in many years to be implemented by CPCL. It will entail an investment of over Rs.3,000 crore. It will improve the distillate yield, and, as a consequence, the gross refining margin.

CPCL, a group company of Indian Oil Corporation, has not been able to undertake any major project, after the one to produce fuels conforming to the Euro-IV specification, following a moratorium imposed by the Ministry on new projects in Manali.

The moratorium came in the backdrop of high pollution levels in the industrial belt located north of Chennai.

The 10.5 million-tonne refinery had thus been only pursuing projects that did not require fresh approvals from the Ministry.

Describing the clearance as a major milestone, CPCL Managing Director A. S. Basu said the project would help process heavier, high sulphur crude that was also cheaper. The distillate yield would go up by 7 per cent, he said. It would be mostly in the form of more petrol, diesel, LPG and coke, he added. While there is considerable demand for the first three products, the company is confident of nearby cement plants consuming the coke.

The project was expected to take a little over three years to be implemented.

Another benefit, according to Mr. Basu, would be in the form of less furnace oil production.

Refining margin

In view of the poor demand for the product, the company is forced to export much of it at lower price. Movement of vessels laden with furnace oil also added to the congestion at the Chennai port, he said. The project would improve the bottomline of CPCL, he said. The gross refining margin was expected to go up by $1.5-2 a barrel, he pointed out. The additional yield would result in increased availability of the widely consumed products in Tamil Nadu, Karnataka and Andhra Pradesh.

On the moratorium in Manali, Mr. Basu said that there was no fresh circular. Indications were that it would be removed as the pollution index was better now, he added.

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