ONGC: DOWNSTREAM PROJECT DEFIES MINISTRY DIKTAT

Vol 2, PW 22 (11 Nov 98) Midstream & Downstream
     

In the last issue of this report ("POLICY REVERSAL: ONGC TOLD TO STICK TO CORE") we reported how the oil ministry asked ONGC to focus on its core activity of exploration and production.

It is surprising therefore to hear that ONGC and Bharat Petroleum Corporation (BPCL) have jointly commissioned Engineers India (EIL) to conduct a feasibility study for a paraxylene project at Hazira in Gujarat. Especially since everyone thought the 26bn rupee ($620m) project - conceived more than three years ago - was put on hold because of high project costs and the global fall in the price of paraxylene.

In the original proposal, ONGC and BPCL were to hold a joint 49% stake in the project, with the balance going to financial institutions and the public. The project aimed at manufacturing 275,000 tonnes of paraxylene, 55,000 tonnes of othoxylene, 300,000 tonnes of benzene, 240,000 tonnes of naphtha and 222,000 tonnes of raffinate.

At one time, the project was billed as ONGC's "Big" foray into the downstream sector. A final decision will be taken after the Engineers India feasibility report but it is difficult to see the project getting the go-ahead while TS Vijayaraghavan remains oil secretary.