IndianOil wants to cut Koyali expansion costs

IndianOil is considering ways to cut costs for its proposed expansion and diversification into petrochemicals at its Koyali refinery in Gujarat.

On June 14, IOC and its project consultant TechnipFMC sent out a terse letter to L&T and Petrofac saying the Koyali tender for EPCC-1 or the 15m t/y Atmospheric Distillation and Vacuum Distillation Unit (AVU) with a straight run LPG treating unit is "annulled." Both submitted bids on December 26 (2018) and on IOC’s request have been regularly extending the validity of their commercial and technical bids since.

Sources close to IOC say it is considering several options: not to have a new AVU at all and continue with the established AVU at the 13.7m t/y refinery after modifying it significantly. "Another option is to go in for a new smaller AVU," we hear.

IOC’s objective is to cut CAPEX in line with oil ministry directives to save expenditure in the current depressed economic climate. Some say these options will be presented towards the end of this month (July) or next month (August) to IOC’s Board which is also expected to take a Final Investment Decision (FID) on the entire Koyali expansion and diversification project, followed by fresh tenders.