Special Correspondent

PM to lay stone for petrochem complex

  • Rs. 35,000 cr. earmarked for the zone
  • Drop in crude prices not to hit profit
  • AGM approves 1:2 bonus

    NEW DELHI: The Oil and Natural Gas Corporation (ONGC) plans to invest over Rs. 35,000 crore in a new 15 million tonnes refinery, petrochemical plant and power and LNG plants at the Mangalore Special Economic Zone. This will be the first Petroleum, Chemicals, Petrochemicals Investment Region (PCPIR) of the country, the company's Chairman and Managing Director R. S. Sharma said here on Tuesday.

    Prime Minister Manmohan Singh was likely to lay the foundation for the company's Rs. 4,900-crore Petrochemical Complex in Mangalore in the second week of November, he said.

    Addressing a press conference here, Mr. Sharma said the ONGC had also made ten new oil and gas discoveries during 2005-06. These included five discoveries in deep-sea areas, all in the Krishna-Godavari basin. Another three finds were in shallow offshore areas of Mumbai, Saurashtra and Krishna-Godavari regions while two discoveries were made in onland blocks of KG basin and the Assam shelf.

    Mr. Sharma said the decline in crude oil prices in recent weeks was not likely to affect the company's bottomline in the current fiscal. He pointed out that the upside in high oil prices had been wiped out largely by the subsidy-sharing mechanism in the last fiscal. Therefore, with production levels expected to be better this year, he felt that the financial performance should be healthier in the current fiscal.

    He said the company had submitted a proposal to the Petroleum Ministry for a transparent mechanism linking subsidies to international prices. He said the proposal was being considered but the Government had pointed out that it could be applied uniformly to other players in the sector like Oil India Limited and GAIL.

    Asked about the proposed Rs. 8,000-crore Rajasthan refinery project, he said studies had shown that the project would be unviable unless the State Government extended large-scale fiscal incentives. He said the laying of a pipeline was inevitable, indicating that crude produced in the State would have to be processed at other refineries. He said MRPL might be denominated as the official offtaker of crude oil found by Cairn Energy in Rajasthan.

    On overseas ventures, he said the company would ship its share of crude oil from the Russian oilfield, Sakhalin-I, in the second week of November. OVL was planning to bring the first two cargos of crude oil each with a capacity of about seven lakh barrels from the Sakhalin-I project in Russia into India in October and December.

    The first parcel of 90,000 tonnes was expected at the Mangalore port in the second week of November, he said, adding that the crude would be processed at MRPL.

    Regarding MRPL, he said it would raise about Rs. 5,200 crore in the debt market to part finance the expansion of its refining capacity to 15 million tonnes. He said the Rs 8,000-crore expansion of MRPL capacity would be done entirely on the MRPL balance sheet and was expected to be completed in 48 months.

    Mr. Sharma said the annual general meeting of the company here cleared issuance of bonus shares in the ratio of one share each against two shares held (1:2). The bonus shares, as recommended by the company board on July 26, would be issued by November by capitalisation of reserves.