PETRONAS & IOC: A MARRIAGE OF CONVENIENCE

Vol 3, PW 2 (17 Feb 99) Midstream & Downstream
     

An executive at Malaysias Petroliam Nasional Berhad, or Petronas, once confided to this report that Indian Oil Corporation (IOC) was the best possible partner it could have in India.

He was right. Petronas and IOC are both state-owned; both are forced to answer to parliamentary committees; and both have ambitions across the sector.

Also, Malaysia, a nation of Muslims, will not feel uncomfortable with IOCs chairman, Mohammed Pathan, perhaps the only Muslim to run a top Indian company. LPG:- Petronass most advanced plans are in the LPG sector.

In August 1998, Indias cabinet cleared an IOC-Petronas proposal to set up a 600,000 tonnes a year (t/y) refrigerated LPG import and storage terminal at Haldia in West Bengal. In December 1998, the two companies incorporated a 50-50 joint venture to undertake the project to supply LPG to industrial and domestic users in eastern India.

Petronas is also examining Kakinada in Andhra Pradesh, and Ennore in Tamil Nadu as future sites for LPG import terminals. PETROCHEMICALS:- Last December, IOC and Petronas signed an MOU for Petronas to acquire a 26% (or less) stake in a petrochemicals complex at Panipat, Haryana, northern India, producing 525,000 t/y of Purified Therepthalic Acid (PTA), derived from naphtha, and 350,000 t/y of Paraxylene.

If it happens, this project threatens Reliance Industries, currently the only producer of PTA in India, with a 78% market share. REFINERIES:- At Nagapattinam in Tamil Nadu, Petronas is the third player in a project to set up a 6m t/y greenfield refinery, promoted by IOC and Madras Refineries.

Petronas is undertaking a detailed feasibility study in partnership with IOC and MRL. The company is looking at other projects.

E&P:- Petronas is in talks with IOC to bid jointly for blocks under NELP. It excludes deepwater, preferring shallow water and onshore blocks.

LNG:- Petronas was runner-up in a tender to supply 2.5m t/y of LNG, promoted by the Tamil Industrial Development Corporation (TIDCO).