Mumbai, July 31: Mangalore Refinery and Petrochemicals (MRPL), the joint venture between Hindustan Petroleum Corporation and the AV Birla group of companies, is all set to sign a memorandum of understanding (MoU) with Kuwait Petroleum Corporation (KPC) for joint efforts in the downstream sector. The MoU is expected to be signed in London during the next few weeks. As part of this agreement, KPC will consider picking up a 26 per cent stake in MRPL thereby becoming the third partner in the joint venture. The company will also look at a long-term supply arrangement of crude to the refinery. Most importantly, KPC will aid MRPL in its efforts to enter the arena of direct marketing.Interestingly, TotalFinaElf of France is also "actively considering" participating in the equity of MRPL. The French oil major is keen on entering the retail segment for petro-products and will view the investment in refining as a means to achieve this end. Other companies in the Middle-East are also in the fray though current indications are that KPC will be the frontrunner. MRPL has a capacity of nine million tonnes, which is proposed to be enhanced to 12 million tonnes shortly. The medium-term plans of the company include increasing this further to 18 million tonnes by which time some infrastructure will be in place for marketing as well as for induction of a strategic partner.
KPC, it may be recalled, was the original co-promoter of the Rs 7,600 crore Paradip refinery, which will now be commissioned by Indian Oil Corporation on its own. KPC opted out of the project and preferred to focus on MRPL, which was a ready-made facility and called for a relatively low investment. It would have also been timely given that the oil sector is due to open up in two years well before the Paradip refinery is operational.
MRPL had roped in Andersen Consulting to examine the prospects of direct marketing, a function that is presently being done by co-promoter, HPCL. Andersen is categoric that the company should go ahead though further details on the international consultant's recommendations could not be obtained. The plan for direct marketing could dovetail with the Mangalore-Bangalore pipeline scheduled to be commissioned in November 2002. HPCL is the lead company of the Rs 650-crore project
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