MUMBAI, February 10: The Oil and Natural Gas Corporation (ONGC) has reiterated its willingness to pick up a stake in the 6 million tonne Bharat Oman Refinery being jointly promoted by Bharat Petroleum Corporation and the Oman Oil Company. The Rs 7,513 crore facility is scheduled to be commissioned in Bina, Madhya Pradesh by 2001-02.BPCL and the Oman Oil Company will hold a 26 per cent stake each in the project. Sources say that ONGC is keen on picking up a stake of up to 15 per cent but the final decision will need to be taken by the two promoters. Given the cost of the project, a 15 per cent assured stake by a third party "is more than welcome" as it will eventually reduce the size of the proposed public issue. The Bina refinery is the only downstream project where the ONGC has expressed its intention to participate, though in a small way. At one time, the corporation was tipped to take a 10 per cent stake in the three million tonne Numaligarh refinery promoted by BPCL, IBP and the government of Assam.Sources indicated that the petroleum ministry was equally keen on ONGC picking a portion of the equity but officials of the corporation have made it clear that this was not on the agenda.
The whole idea of seeking ONGC participation in the Numaligarh project was to promote the corporation's presence in the north-east. There have been indications that Oil India will pick up a 10 per cent stake but there have been no developments on that front, either. Officials of Oil India had, at one point, told The Financial Express that a stake in the refinery seemed an attractive option but the small capacity of three million tonnes was discouraging especially if this had to prevail in a completely deregulated scenario.
As for the Bina refinery, sources say that BPCL and the Oman Oil Company should not really have any problems about giving a stake to ONGC. The modalities are yet to be worked out but the arrangement is expected to be finalised before planning a public issue. The move by ONGC makes sense,observers say, for several reasons. The Bina refinery is scheduled to be commissioned around the same time when the administered pricing mechanism will be completely dismantled in the oil sector. This would naturally imply that players like ONGC can have a control-free regime for selling crude. The tie up with Bharat Oman would also result in access to a huge retail network which would help ONGC in its other pursuits.
Investment in a refinery is also a safe proposition and will help ONGC become a complete company with expertise ranging from exploration to refining and marketing. The Bina refinery will be supported by three linked projects - a marketing terminal to be set up by BPCL to distribute the products; the power project based on residual fuel supplied by the refinery being set up by a company promoted by Hindustan Development Corporation which will supply power and steam to the refinery; and a product pipeline from Bina-Jhansi-Kanpur being laid by BPCL to evacuate part of the production of therefinery economically to the northern region.
The six million tonne project will also comprise crude import facilities through a single point mooring (SPM) system and crude oil storage terminal (COT) and pumping facilities at Vadinar, Gujarat; a cross country crude pipeline, 935 km long, from Vadinar to Bina and infrastructure facilities at the refinery as well as COT eg townships, utility hook-ups to battery limits etc.
Analysts said, BORL would have a locational advantage due to its proximity to its target markets. As there is no other refinery in the vicinity, it would have considerable advantages in a free-pricing scenario. It would also have a stable product mix as the Oil Coordination Committee will assure a continuous supply of crude oil.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
