State-owned Hindustan Petroleum Corp Ltd (HPCL) has approved the incorporation of a joint venture company to set up Rs 37,320-crore oil refinery and petrochemical complex in Rajasthan.
HPCL board in its meeting on April 24 at Jaipur “approved formation of a joint venture company for Rajasthan Refinery at Barmer”, the company said in a statement here.
HPCL will hold 74 per cent stake in the nine million tonne a year refinery with Government of Rajasthan taking 26 per cent. The unit is planned to go on stream in four years.
“This approval for formation of joint venture between HPCL and Government of Rajasthan, by HPCL Board, is yet another milestone decision which shall further speed up the process of setting up 9 million tonne refinery at Barmer,” it said.
The refinery, which will fulfil nearly a decade-old demand of the state, will run on crude oil from neighbouring oilfields of Cairn India. Half of the crude oil requirement at the proposed refinery will come from the Barmer oilfields of Cairn and the rest will be imported.
Besides taking 26 per cent stake, the state government has given in-principle approval for providing an interest free loan of Rs 3,736 crore per annum for 15 years from the date of commercial production.
The state government has also assured continuous supply of 28 MGD of water for the project from Indira Gandhi canal and about 3,500 acres of land for refinery, terminal and township near Leelala area in Barmer.
Originally, state-owned Oil and Natural Gas Corp (ONGC), which owns 30 per cent interest in the Barmer oilfields of Cairn India, had in 2005 committed to building the refinery but later it started soft-peddling the project.
Last year, HPCL entered the fray and has proposed to take 51 per cent stake in the project. ONGC, which originally had the authorisation from the government for processing the Barmer crude at the proposed refinery, too is now keen to take a stake in the project.
Rajasthan government is acquiring about 926 hectares of land for the project in which Engineers India Ltd too will take a small stake.
The refinery will process crude oil produced in Rajasthan as well as Arab mix crude.
Cairn India, which holds 70 per cent interest in the fields, currently produces about 175,000 barrels per day oil (8.75 million tonnes a year) from the Rajasthan fields and has potential to go up to 300,000 bpd (15 million tonnes).
Vedanta Resources, which in 2011 acquired Cairn India for USD 8.67 billion, too is interested in taking a small equity of 2-3 per cent in the project.