Cals Refineries buys Petro Canada`s units for $110 mn

The company is in the process of setting up about 5 million tonnes per annum (mtpa) capacity refinery at an investment of $1 billion in Haldia by relocating an existing refinery of Bayernoil in Ingolstad, Germany.

Cals is buying a crude distillation, vacuum distillation and delayed coker unit from Canada's second largest petroleum downstream company from its facility in Edmonton. "The deal with Petro Canada has been signed for these units recently and is worth about $110 million freight on board," said Arun Ramachandra, president (commercial), Cals Refineries.

"It will help in increasing the proportion of high-yield products such as gasoline and diesel," said Dikshit Mittal, an analyst at Religare Securiites, a Mumbai-based brokerage. "Eventually, it will help in increasing the refining margin," he added.

In 2006-07, the Paris-based International Energy Agency (IEA) estimated an additional global crude oil distillation capacity requirement of 580 mtpa by 2011. IEA is a governmental organisation that provides statistics about the international oil market.

India has moved from the position of 19th largest refining country in the world in 1995 to the fifth largest now with a share of 3 per cent of the global capacity.

Cals Refineries had signed a memorandum of understanding with the world's third largest energy company, BP, for a crude oil supply and product offtake deal a few months ago. Cals Refineries raised $200 million through a global depository receipt (GDR) issue on the Luxembourg Stock Exchange in November, attracting investments from the Dubai Investment Group, a part of Dubai Holding and London's RP Capital. It is now hoping to raise a further $100-200 million from a strategic investor.

"We are evaluating offers from global investors, but nothing has been finalised yet," said a company spokesperson.

The existing plant in Germany is expected to be shut down by June and after its relocation to Haldia, production is expected to start in 2010.

On Tuesday, Cals Refineries stock closed 2.80 per cent down to Rs 53.35 on the Bombay Stock Exchange. The benchmark index of the exchange was down by 0.64 per cent to 16,752.86.