BPCL to give majority stake to UK company in petchem JV

State-run Bharat Petroleum Corporation Limited (BPCL) has finalised a joint venture (JV) agreement with UK-based LP Chemicals for petrochemical business. BPCL is likely to hold 49 per cent in the venture, with the British company holding a majority 51 per cent.

The JV would invest about Rs 5,000 crore in the project and have a 70:30 debt equity ratio. LP Chemicals may bring in Rs 1,500 crore. BPCL plans to spend Rs 40,000 crore in the next five years to set up a petrochemical plant at the Kochi refinery to produce niche products, expand the capacity of existing refineries, gas marketing and exploration and production.

“We will sign the memorandum of association shortly. After this, we will have to do a feasibility report and later a company will be formed. We should be able to put things in place by early next year,” said a senior BPCL executive, on condition of anonymity.

The executive said the company would integrate the expansion of its Kochi refinery and construction of its petchem plant. The deadline for both projects has been set for 2015. The country’s second-biggest state-run refiner would expand the Kochi refinery by 63 per cent to process cheaper, high-sulphur crude to improve margins and products.

In March, it had said it would invest Rs 14,225 crore in the expansion and upgradation project, which would see the refinery processing 310,000 barrels per day (bpd), clearance for the project is expected in the latter half of 2012.

It had also said it plans to produce polymer-grade propylene from the project which would be used as a feedstock for a series of niche petrochemicals.

The executive said the company was looking at producing 500,000 tonnes of propylene derivatives yearly, which are imported at present. “Our partner is a licensor of the speciality chemical that we are planning to produce,” he added. BPCL is engaged in talks with the Kerala government for concession on the investment in the planned petrochemical unit, the official added.

LP Chemicals, headquartered in Winsford off Cheshire, manufactures and distributes laboratory chemicals and veterinary chemicals to customer specification.