Oil India prepares due diligence on Bhatinda refinery

Vol 10, PW 14 (02 Nov 06) Midstream & Downstream
     

Oil India is preparing a Notice Inviting Tender to select a consultant to carry out technical and financial due diligence on Hindustan Petroleums proposed 9m t/y refinery at Bhatinda in Punjab.

Likely to be ready within two weeks, the tender comes as Oil India moves forward on HPCLs offer to the explorer of a stake in the project. We are very serious about this proposal, reveals an Oil India source.

It is not at a preliminary stage. On 5th September, Oil India chairman MR Pasrija told fellow directors during a board meeting that HPCL had offered the company a 25% stake in the Bhatinda project.

Shortly after, Oil India set up an internal committee to study the HPCL proposal and submit a report within two months. Bhatinda was conceived so many years back, adds a source.

But it is yet to come up. We need to look into the reasons for that and the reason why BP and others pulled out." Last October, global major BP signed a Letter of Intent to form a 50:50 joint venture with HPCL to construct and operate the refinery but in March this year pulled out saying its shareholders returns were better elsewhere.

This is unlikely to happen with Oil India, whose interest is not restricted to the refinery but also to HPCLs plans to lay a 1011-km crude pipeline from Mundra port in Gujarat to Bhatinda. "Oil India has expertise in laying pipelines, we hear.

We are laying a product pipeline from the Numaligarh refinery to Siliguri in West Bengal. This pipeline will be owned and operated by us." Oil India expects its 16-inch, 660-km oil product pipeline from the Bharat Petroleum operated Numaligarh refinery to Siliguri in West Bengal to be ready by March next year.

Oil India holds 12.3% equity in the Numaligarh refinery but wants to increase this to 26%. Oil India is also credited with laying one of Asia's oldest and longestcrude pipelines: a 1157-km stretch from Duliajan in Assam to the Barauni refinery in Bihar, commissioned in 1962 with a capacity of 5.5mt/y.