HPCL approaches global energy cos to revive Vizag project

State-owned Hindustan Petroleum Corp Ltd (HPCL) has approached global energy giants like Total SA of France and BP plc for reviving the stalled Rs 50,000 crore refinery-cum-petrochemical project at Vizag in Andhra Pradesh.

The 15 million tonne a year refinery and a mega petrochem plant is planend to be built about 70 km away from the company's existing Vizag refinery, HPCL Chairman and Managing Director S Roy Choudhury told reporters here.

"(Gas firm) GAIL India has expressed interest in taking stake in the petrochemical plant while for the refinery we have written to 13-14 global majors for participation," he said.

An HPCL-led consortium, which included steel billionaire LN Mittal's group, Total of France, state-owned Oil India and GAIL, had in 2009 put the project on hold as petrochemical demand then was seen as too weak to justify the investment.

Total has so far no responded and indications are that it may not be interested. HPCL has also approached OIL, Indian Oil Corp (IOC) and Oil and Natural Gas Corp (ONGC) for partnership.

"We estimate that our petroleum product sale would be 50 million tonnes in 2020 and refining capacity would be around 42 million tonnes," he said.

HPCL currently owns a 6.5 million tonnes refinery at Mumbai and a 8.3 million tonne unit at Vizag. While the Vizag plant is being expanded to 15 million tonnes, HPCL is also setting up a 9 million tonnes refinery at Barmer in Rajasthan at the cost of Rs 37,320 crore.

HPCL had in 2007-08 planned the only-for-exports refinery to target demand in South East Asia and the Middle East.

The five-way alliance of HPCL, explorer OIL, gas utility GAIL India, Mittal Investment Sarl and Total had in October 2007 signed a memorandum of understanding to look at the feasibility of setting up the Vizag project.

Total did pre-feasibility for the refinery project and demand studies, while GAIL was in charge of the study of the petrochemical unit.

But the project was put on hold before equity structure could be decided.

The Chairman said the project will depend upon availability of land for which the company has approached the Andhra Pradesh government.

"We would need 3,000 acres of land for the project," he said.

While the refinery was to be built to process sour and heavy crudes, which are cheaper than low-sulphur sweat crude oil, the petrochemical plant was to use the naphtha produced in the refinery as feedstock.