EXXONS INTEREST IN AN INDIAN REFINERY

Vol 2, PW 23 (09 Dec 98) Midstream & Downstream
     

Exxon is being touted as the new joint venture partner in a greenfield refinery project backed by Hindustan Petroleum Corporation (HPCL).

Saudi Aramco, was HPCLs original partner for this project but withdrew to join Shell in a (now aborted) plan to set up Indias fourth largest refining company. If Exxon reaches agreement with HPCL, it is likely to acquire a 26% equity stake.

Petrowatch learns that agreement on terms is close. A team from Esso Mauritius Overseas Ltd, Exxons India subsidiary, is in Mumbai thrashing out the terms of a marketing deal for petroleum products with executives from HPCL.

Petrowatch understands Esso is insisting on the right to sell product from Bhatinda under the Esso brand name in a portion (possibly 150-200) of HPCLs 1,200 retail outlets across northern India. A past joint venture with HPCL for distribution of lubricants has lapsed and this report learns that Esso "is keen to reestablish its brand" in India.

"Talks with Esso have reached a fairly advanced stage", says Hira Lal Zutshi, Chairman, HPCL. Richard Davies, head of Essos India operations, is more circumspect: "We are still thinking about it.

The proposal is yet to be sent to our board". The refinery is due to be commissioned in 2002.

It will have an initial capacity of 6m tonnes a year (t/y), rising to 9m t/y and will principally serve northern Rajasthan, Punjab, Himachel Pradesh and Jammu & Kashmir. It is billed as Indias most sophisticated refinery - with a distillate yield of 87%.

A foundation stone was laid at the refinery site by Indian PM Atal Behari Vajpayee on 13 November.