Energy major BP (formerly British Petroleum) has entered into an agreement with Spice Energy for supply of crude oil and product offtake.
MNC to supply 5 mt heavy and light crude to Spice Energy’s refinery
BANGALORE: Energy major BP (formerly British Petroleum) has entered into an agreement with Spice Energy for supply of crude oil and product offtake.
Under the agreement, the London-headquartered energy conglomerate will supply 2.5 million tonnes of Arab heavy crude and an equal quantity of Arab light crude to Spice Energy’s subsidiary CALS Refineries.
CALS Refineries is setting up a 5 million tonnes refinery at Haldia, which will be commissioned by the first quarter of 2010.
According to sources in the know, the deal between the companies was inked 3-4 weeks back.
It is, however, not known at what price BP would be supplying the crude to Spice Energy or at what price the MNC will be picking up petrol and diesel from the Indian refinery.
“We cannot say much on pricing. It will be market-related. Also, the refinery is not yet opereational,” said a BP spokeswoman.
BP was earlier in talks with Hindustan Petroleum Corporation Ltd (HPCL) to set up the Bhatinda refinery at a cost of Rs 120,000 crore ($3 billion).
However, its discussion with state-owned refinery fell through and the Mittals bought the stake in HPCL.
When contacted CALS Refineries president Arun Ramachandran confirmed the signing of deal but refused to divulge any further details.
Ramachandran said that when CALS’ Haldia refinery begins production in 2010, it will be operating at 85-90% of its capacity.
“It will operate at 100% capacity after two years,” said Ramachandran.
He said that his company, which will be producing Aviation Turbine Fuel (ATF), LPG and petroleum coke, had the option to export 50% of its production.
“We will decide whether we want to export the entire production based on the market scenario then,” said Ramachandran.
CALS’ refinery at Haldia will be set up from the dismantled 90,000-barrel-per-day refinery it has bought from Germany’s Lohrmann International, and will cost Rs 60,000 crore ($1.5 billion).
BP, which usually picks up stake in refineries to which it supplies crude, is not buying stake in Spice Energy. Instead, it is going for supply and offtake arrangement with Indian energy firm.
p_sharma@dnaindia.net
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