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Murali Gopalan
Mumbai, Dec 1: Hindustan Petroleum Corporation (HPCL) and Exxon Corporation of the US are close to finalising the marketing terms of their proposed refining venture in Bhatinda, Punjab. A team from Exxon, presently in the city, is in the last round of talks with HPCL officials on various other aspects of the alliance.
Industry sources said that the American oil major has indicated that it would like to market products of the joint venture in some of HPCL's own outlets. However, there is every likelihood of this being done under the Exxon banner though there would be no transfer of ownership. Again, this would be confined to a portion of HPCL's outlets in the north as this is the region which would cater to products from the refinery.
"Exxon is clear about its long-term interests in India and this is the best way to signal its entry. It will also, to a large extent, help the company establish its image here," sources said. Exxon will hold 26 per cent of the equity in the joint venture along with HPCL withthe balance proposed to be offered to the public and financial institutions.
The Rs 10,000-crore facility will have a capacity of nine million tonnes. It will be accompanied by a power plant and product pipeline from the refinery to Udhampur. Crude will be transported through a pipeline from Vadinar in Gujarat to Bhatinda.
It may be recalled that the project was first planned as a 26:26 joint venture between HPCL and Saudi Aramco. The latter withdrew and, instead, proposed a unique alliance with Shell to cater to marketing petro-products in India along with another oil PSU as a third partner. This idea is unlikely to germinate for a while now as the ministry of petroleum and natural gas has put it on the backburner.
During this impasse following Aramco's exit, ONGC was tipped to be the co-promoter for the Punjab project except that this would have only resulted in the joint venture becoming a government company with a combined PSU stake of 52 per cent. In any case, this idea was quickly abandoned whenExxon stepped into the picture and signed a memorandum of understanding with HPCL.
Experts say that the American major is perfectly justified in demanding marketing rights as it is investing in a refinery at a time when margins are so unattractive. This was in fact the compelling factor for both Shell and Aramco to call off their refining ventures initially planned with BPCL and HPCL respectively.
Hence, while the products of the Punjab refinery will be marketed under the joint venture umbrella in HPCL's retail outlets, it is more likely to be done under the Exxon banner. This, as indicated already, will be in a few select outlets of the vast HPCL network in the northern region (the corporation has over 4,500 outlets all over the country of which around 1,500 are situated in the north).
It may be recalled that similar talks on marketing rights are presently underway between the Indian Oil Corporation and Kuwait Petroleum Corporation (KPC), the co-promoters of the nine-million tonne Paradip refinery.Though details of the discussions are not known, sources have hinted that KPC, like Exxon, is keen on promoting its own brand image through some of IOC's 7,000-and-odd retail outlets.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
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