HPCL seeks Total, Kuwait investment in refinery

Kuala Lumpur, June 10: Hindustan Petroleum Corp. Ltd. is in talks with Total and Kuwait to build a new $3billion refinery in India instead of expanding the state-run refiner'sexisting plant, its chairman said on Sunday.

HPCL has been in talks with major Total , KuwaitPetroleum International (KPI) and junior state oil producer Oil IndiaLtd. over taking a stake in a planned doubling of the expansion at itsVizag refinery for more than six months.

But HPCL Chairman and Managing Director Arun Balakrishnan toldReuters that negotiations had shifted in favour of a new greenfieldproject, still in Vizag, that would have a capacity of at least 180,000bpd. He also said the deal could mean building an aromaticspetrochemical plant before the refinery.

''We are very sure Oil India will be there plus these twocompanies, Total and Kuwait Petroleum,'' Balakrishnan said in aninterview ahead of the Asia Oil and gas Conference. ''Certainly by theend of the year we should decide one way or the other.'' The refineryis expected to be completed in around 2011.

HPCL is India's third-largest refiner with capacity of about 260,000 barrels per day (bpd).

''This is a very preliminary stage, probably we may start with anaromatic unit and retrofit it with a refinery. A lot of discussions aregoing on and nothing is final,'' he said.

Balakrishnan said HPCL may still decide to expand its 150,000 bpdVizag refinery, although the new project and its existing $2 billionplan to upgrade fuel production to meet Euro-4 standards at both itsplants would take precedence in the coming years.

India's refiners are seeking foreign partners to help secure crudesupplies and fund expansion plans that will turn India into a majorfuel exporter within the next five years, but oil majors like BP have been reluctant to invest due to low domestic pricesand an uncertain outlook for global margins.

HPCL is also planning to build a new refinery in Bhatinda togetherwith with an investment vehicle run by steel magnate Lakshmi Mittal,after 17 overseas firms turned down the project.

Reuters