Indian Oil Corporation (IOC), the country’s largest oil marketing company, has put on hold its plan to set up a 15-million tonne refinery at Haldia due to the economic downturn. IOC was supposed to rope in an international partner for the project.

“The project has been put on hold because of the financial turmoil and no progress has been made,” said an IOC executive.

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IOC and the West Bengal government were to jointly explore the possibility of roping in an internationally-reputed multinational company as a partner. IOC along with this international partner was supposed to carry out a techno-economic feasibility study for the project. The study has not yet been conducted in the absence of such a partner.

In September 2006, IOC had signed a memorandum of agreement (MoA) with the West Bengal government to develop Haldia as a Petroleum, Chemicals and Petrochemicals Investment Region (PCPIR). The agreement envisaged setting up of a refinery of 15-million tonne capacity with downstream petrochemical facilities. IOC already operates a 6-million tonne refinery at Haldia, which is being expanded to 7.5 million tonnes.

IOC is not the only company that has put on hold its expansion plan. Last week, Mangalore Refinery and Petrochemicals, a subsidiary of Oil and Natural Gas Corporation (ONGC) said it has shelved its plan to build a 15-million tonne refinery.

Analysts say the economic downturn is not the only reason behind putting such plans on hold. Such decisions are also being influenced by the increasing surplus refining capacity in the country. India has surplus refining capacity of nearly 45 million tonnes, which is set to increase further.

The country’s refining capacity increased by 29 million tonnes per annum (MTPA) to 177.97 MTPA from December 2008 with the commissioning of Reliance Industries’ Jamnagar refinery. Of this, 105.5 MT is in the public sector, while the rest 72.47 MT is in the private sector.

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