MUMBAI, February 23: The proposed paraxylene venture between the Oil and Natural Gas Corporation (ONGC) and Bharat Petroleum Corporation may come a cropper. Sources say that though no final decision has been taken on shelving the project, the high cost coupled with falling paraxylene prices the world over have discouraged the partners from going ahead.If the idea were to be dropped, ONGC is likely to look for, "viable and lucrative" options like gasoline. Whether BPCL will continue to be a partner remains to be seen but now with the memorandum of understanding (MoU) signed with the Indian Oil Corporation recently, it is more than probable that the refining major will be invited to partner ONGC.
BPCL and ONGC were to hold 49 per cent of the equity in the Rs 2,500 crore project with the balance proposed to be raised from the public and financial institutions. The foreign exchange component in the plan was Rs 830 crore. The ONGC board approved of the project nearly two years ago and the proposal wassubmitted to the ministry of petroleum and natural gas.
The problem arose when the initially envisaged cost began escalating to the present estimate of Rs 2,500 crore. At that time, ONGC officials said they were looking at various ways of bringing this down by at least Rs 400 crore and believed this was possible using the appropriate technology.
The project involved manufacturing 2.75 lakh tonnes of paraxylene, 55,000 tonnes of orthoxylene, 3 lakh tonnes of benzene, 2.4 lakh tonnes of light naphtha and 2.22 lakh tonnes of raffinate. The facilities included a paraxylene recovery unit, aromatics recovery unit and naphtha splitter unit.
The project was so planned that it would be self-sufficient in all departments except for raw water and fuel gas which would be sourced from ONGC's gas terminal nearby. Officials at ONGC reiterate that the corporation is serious about its foray into downstream activities. The paraxylene project, according to them, was high on the priority list but factors like cost andfalling prices of paraxylene have been the stumbling blocks.
``Even now, it is not as if ONGC has abandoned the idea; it is looking at other practical options," sources said. A big step forward, they add, has been the signing of the MoU with IOC for sharing expertise in upstream and downstream activities. ONGC is part of the LNG (liquefied natural gas) consortium along with IOC, BPCL and the Gas Authority of India Ltd.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
