Indian Oil Corp Ltd Turkey plan put on backburner

State-owned Indian Oil Corp Ltd has put its plans to set up an oil refinery in Turkey on the backburner, and is currently focusing on acquiring a producing hydrocarbon asset overseas along with Oil India Ltd.

Back home, the company will focus on its core activity of refining and retailing at present, a company official said. “We have not shelved any projects but the focus right now will be on core activities,” the official said on conditions of anonymity.

“Right now we are not that interested in setting up a refinery and retail outlets overseas... We have to set our priorities as we do not want a single project to eat up all the money,” the official said.
The company is looking at hydrocarbon producing assets, preferably in East African nations.

“We need to acquire some mid-size E&P projects overseas. We are looking for assets in partnership with Oil India Ltd,” the official said.

Earlier, Indian Oil had announced its plan to set up a 15 million tonne integrated refinery-cum-petrochemicals complex at Ceyhan in Turkey at an investment of around $6 billion.

Fuel refining and marketing are core strengths of Indian Oil and the company currently sees need for higher refining capacity in the domestic market. In line with that it is completing the $6.2 billion Paradip refinery project in Orissa.

“We will start commissioning the Paradip refinery in March 2012 and hope to complete the commissioning by Aug-Sep (that year),” the official said.

Indian Oil may also consider setting up a new refinery after 2015 as demand for oil products is expected to continue to rise at a steady pace, he said.

The company is also likely to increase the capacity of its refinery in Gujarat to 18 million tonne from 13.7 million tonne currently.
The refinery primarily serves the demand for petroleum products in western and northern India.

It also plans to invest around Rs 35,000-40,000 crore in its petrochemical operations over the next 10 years.

“The existing petrochemical projects will require an investment of around Rs 35,000-40,000 crore by 2020, but more new projects may come by then which would mean more investments,” the official said.

However, the company will now decide on its $4.5 billion Orissa petrochemical project once the refinery is closer to being commissioned.

“We will take a call on our planned Paradip petrochemical project only in 2011-12,” the official said.

Indian Oil plans to increase its investment in new ventures, such as wind and solar power generation.

“Renewables will be a major area of focus for us... It is the way forward. Renewables, biofuels and for that matter even petrochemicals are lucrative for us because they will help us diversify and also because we don’t know when the subsidy issue will get resolved,” the official said.

State-owned oil marketing-cum-refining companies currently retail cooking and auto fuels at subsidised rates.

Under an ad hoc mechanism, the government compensates OMCs for revenue loss on kerosene and cooking gas, while upstream oil companies pick up the subsidy bill for petrol and diesel.

The uncertainty over quantum and timing of receipt of compensation has led to huge volatility in financial performance of oil marketing firms.

While successive governments, over the years, have maintained their intent to end the current subsidy regime and formed a number of panels to suggest deregulation of prices, they have failed to arrive at a decision due to political compulsions.
   
The official said Indian Oil now has oil bonds worth Rs 18,000 crore in its kitty.
NW18