ONGC all set to be 2nd largest oil refiner

Oil and Natural Gas Corp, India's largest oil producer, on Wednesday unveiled mega plans to become the country's second largest oil refiner, with plans to set up new refineries at Mangalore, Kakinada and Barmer.

ONGC, which currently owns the 9.69 million tonne Mangalore Refinery, plans to set up another 15 million tonne refinery at Mangalore after expanding the current refinery to 15 million tonne, company chairman and managing director Subir Raha said in New Delhi.

The company, which also has lined-up ambitious investments in the petrochemical complex at Dahej in Gujarat and Mangalore in Karnataka, besides foraying into power generation, plans to set up a 7.5 million tonne refinery at

Barmer in Rajasthan in joint venture with Cairn Energy of UK and another 5 million tonne refinery at Kakinada in Andhra Pradesh.

With the new refineries, ONGC will have 42.5 million tonne of refining capacity, second only to Indian Oil Corp, which owns about 48 million tonne refining capacity.

"We may form subsidiaries or joint ventures for our downstream projects," he said, indicating that the subsidiary companies may go for public floats (initial public offer IPO) for raising capital.

ONGC and Cairn will hold 50 per cent equity in Rajasthan Refineries Ltd for building the 7.5 million tonne refinery at the site of the 2.5 billion barrels of oil reserves found by the British firm in the state.

ONGC's subsidiary MRPL, which will execute the implementation of the new 15 million tonne refinery at Mangalore, would join IL&FS and Andhra Pradesh Industrial Development Corp in the Rs 5500 crore (Rs 5.5 billion), 5 million tonne export oriented refinery at Kakinada.

ONGC's subsidiary Mangalore Refinery and Petrochemicals Ltd would join IL&FS and Andhra Pradesh Industrial Development Corp in the Kakinada refinery, Raha said.

ONGC/MRPL would hold 46 per cent stake in the Kakinada refinery while IL&FS will have 51 per cent interest. The remaining 3 per cent would be held by APIDC.

ONGC, which is operating its 9.69 million tonne MRPL at 12 million tonne per annum capacity through de-bottlenecking, plans to raise MRPL capacity to 15 million tonne by 2007-08 and than double it by putting an additional 15 million tonne unit later.

Raising MRPL capacity to 15 million tonne capacity will entail an investment of about Rs 3,000 crore (Rs 30 billion), Raha said.

While the Rajasthan refinery would take 36 to 40 months for construction, Kakinada refinery would come up in 48 months, he said, adding the new 15 million tonne refinery at Mangalore was at pre-feasibility stage and investment and time-schedule for its implementation would be decided after feasibility studies are completed.

Raha said ONGC and MRPL have separate licenses to retail petrol and diesel and have now got approval for direct/bulk sale of liquefied petroleum gas (non-subsidised LPG) and non-PDS (public distribution system) kerosene.

ONGC also plans to double capacity of its 0.5 million tonne per annum Tatipaka refinery.