CPCL looking at expanding capacity in Nagapattinam

Company is looking to expand its capacity in CBR, where land and other infrastructure are already available, said B Ashok chairman of CPCL

Chennai Petroleum Corporation Ltd (CPCL), group company of Indian Oil Corporation is exploring the possibility for expansion at the Cauvery Basin Refinery (CBR), at Narimanam, in Nagapattinam district, Tamil Nadu, which could be with an investment of up to Rs 22,500 crore.

Speaking to the shareholders in the company's Annual General Meeting in Chennai on Wednesday, B Ashok, chairman of the company has said that the company is looking to expand its capacity in CBR, where land and other infrastructure are already available.

"The new refinery also will bring many opportunities to invest in Petrochemical units in the long term," he said. Company currently has a capacity of around one million tonne in CBR, which is utilising almost half of the capacity.

Plans are to freshly set up a refinery which could have a capacity of six to nine million tonne, without considering the existing capacity there. It would be conducting a feasibility study for this.

According to company officials, the investment required per million capacity would be Rs 2,200-2,500 crore, though the exact details would be known only after the feasibility study.

The company has a total capacity of around 11.5 million metric tonne per annum (MMTPA), with around 10.5 MMTPA capacity in Manali Refinery, near Chennai and the rest in CBR.

Ashok added that easing of Europen Union sanctions on Iran will enable CPCL to firm up the plans for funding of new projects and capital investments.

"One of the positive developments during the year is easing of European Union sanctions on Iran, which will enable your company to confirm to firm up the plans for funding of new projects and capital investments," he said.

According to earlier reports, the National Iranian Oil Company which is a 14 per cent shareholder of CPCL was not able to take part in investments into the company, which has affected the funding for the expansion of CPCL.

"Your company will also be benefited in terms of lower insurance premium resulting in savings in operating cost besides the possibility of carrying out Risk Management activities and other technical collaborations," he added.

Union Minister of State (Independent Charge) for Ministry of Petroleum and Natural Gas Dharmendra Pradhan recently said that the Ministry is looking at merging CPCL with its parent company, Indian Oil Corporation Ltd.

In addition, CPCL is planning to utilise natural gas in Manali Refinery as imternal fuel, which will enable the company to gain experience in handling natural gas operations and pave the way for investment opportunities in natural gas applications, which are expected to grow at a fast pace in the near future.

The company is expecting to complete the Rs 367 crore Diesel Hydrodesulfurisation (DHDS) by March 2017 and the Rs 497 crore Diesel Hydrotreating (DHDT) revamp will be mechanically completed by September 2019, in order to meet the BS-IV diesel quality norms to be implemented by April 1, 2017 and BS-VI quality norms for petrol and diesel products from April 1, 2020, respectively.

The physical works of Rs 3,110 crore resid upgradation project is 88 per cent completed as of August 2016 and the mechanical completion is expected in 2016-17.