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‘Private oil co keen on refinery at Cairn’s Rajasthan field’

A leading private oil refiner is willing to build a well-head refinery at Cairn India’s Barmer oil-field after the Rajasthan government has agreed to give tax concessions, officials in the know said.

, ET Bureau|
Apr 19, 2010, 01.34 AM IST
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NEW DELHI: A leading private oil refiner is willing to build a well-head refinery at Cairn India’s Barmer oil-field after the Rajasthan government has agreed to give tax concessions, officials in the know said.

“Cairn India and some state-owned oil companies could also be equity partners,” a Rajasthan government official said on condition of anonymity. The state government may pick up a 26% stake in the proposed refinery project, he said, but declined to disclose the name of the prospective promoter as discussions were at a preliminary stage.

Reliance Industries (RIL) and Essar Oil are the two major private sector oil refiners in the country. The RIL spokesman did not respond to ET’s query. But an Essar Oil spokesman said his company was not interested in the project. Cairn India spokesman Manu Kapoor said; “We offer no comment at this stage.”

A senior official in the oil ministry confirmed the development. “An expert panel has said that the refinery is viable with state assistance. The state government is also keen. Some oil companies are willing to invest. We are considering the proposal,” the official, who did not wish to be named, said.

Earlier this week, a committee headed by former oil secretary SC Tripathi said initially, a 4.5-6 million tonne per annum capacity well-head refinery can be put up at Barmer. The capacity could later be extended to 9-12 million tonne, it said. The committee was constituted by the state government to examine the viability of a refinery in the state after Cairn and its 30% partner in the Barmer oil field, Oil & Natural Gas Corp (ONGC), had shelved their plan to construct a well-head refinery.

Earlier, the BJP government in the state had refused to give concessions to ONGC for setting up the refinery as sops were more than double the project cost. The current Congress government in the state revived the project by setting up the Tripathi committee to assess its viability. ONGC had always maintained that the refinery project was the first option but that the project was not viable without concessions worth over Rs 26,000 crore. Meanwhile, Cairn and ONGC laid a pipeline to evacuate the crude oil produced from Barmer field to a nearby port on the west coast. Cairn is the operator of the field with 70% stake.

According to an expert in Engineers India Ltd, the pipeline may also be used for pumping in imported crude to run the refinery. “The life of the Barmer block is 7-8 years while the life of a refinery is 40 years. Hence, a pipeline is required to supply crude to the refinery,” he said requesting anonymity. Engineers India provided technical help to the committee in preparing the report.
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