CPCL puts Ennore refinery on hold

Chennai Petroleum Corp Ltd (CPCL), a unit of Indian Oil Corp, has put its plan of setting up a refinery at Ennore on hold because of environmental issues and is instead, considering to invest Rs 10,000 crore on expanding the existing unit.

"We couldn't get environmental clearance for the greenfield (15 million tonnes a year) refinery at Ennore (in Tamil Nadu) due to the presence of a wildlife sanctuary," CPCL Director (Finance) NC Sridharan said here.

The state government offered alternate land at Cuddalore but it was not making economic sense due to the distance between the proposed site and the existing units at Manali. As a fallback option, the company is considering replacing an old 3 million tonnes unit at Manali with a new 9 million tonnes a year unit in 4-5 years.

"This will cost Rs 9,000-10,000 crore and once the new unit is constructed the old unit will be dismantled," he said. "So the incremental capacity will be 6 million tonnes."

The company, he insisted, has so far not taken any decision on setting up a unit at Cuddalore or expanding the Manali unit. "We may decide by the year end," he said.

CPCL has two refineries with a total capacity of 10.5 million tonnes a year. The company is debottlenecking one of the crude distillation unit (CDU) to raise capacity of the unit to 4.4 million tonnes from 3.8 million tonnes.

Overall, the refinery capacity will go up to 11.1 million tonnes, he said, adding that after the Rs 10,000 crore expansion of the old unit the company will have a capacity of over 17 million tonnes. Sridharan said the debottlenecking will cost Rs 400 crore and will be completed this year.

CPCL bought 3 parcels totalling 0.15 million tonnes of crude oil from Reliance Industries' MA field in the eastern offshore gas-rich KG-D6 block in 2009-10. This year, it plans to buy 0.5 million tonnes, he said, adding the company was close to signing term contract.