Kuwait Petroleum eyes stake in IOC's Paradip refinery

Company is willing to offer no more than 26% stake in the project

Kuwait Petroleum Corp (KPC) is in talks with Indian Oil Corp (IOC) for taking a stake in the state-owned firm's Rs 29,777-crore Paradip refinery and a proposed petrochemical complex. "They (KPC) have evinced interest (in taking stake). Talks are on," a senior IOC official said here.

IOC, which will start commissioning the 15 million tons a year refinery at Paradip in Odisha in June, is willing to offer no more than 26 per cent stake in the project.

"We are discussing details of their participation, whether they are interested in taking a stake in the refinery or in the petrochemical project or both is what we are discussing now," he said.

IOC wants to closely examine conditions that Kuwait may attach for equity participation. "If the equity participation will be subject to the refinery buying all or most of its crude oil requirement from Kuwait then that will be a big no-no from us as we don't want to tie ourself down to just one supplier," he said.

The refinery has been built to process at least 40 per cent of toughest, heaviest and the dirtiest crudes like Maya of Mexico which are cheaper than the cleaner and easier varieties available from the Middle-East. The refinery will have a Nelson Complexity Index of 13, the highest in the world.

The project will have to be spun off into a separate company if Kuwait is to participate in it. IOC plans to set up a Rs 3,150 crore Polypropylene unit adjacent to the refinery in 39 months. "A team from Kuwait is expected to visit Paradip in coming weeks," the official said.

IOC had initially planned to export some of the fuel produced at Paradip but the same will now be consumed domestically due to rising fuel demand. The refinery was originally planned to export at least 2.05 million tons of petrol and 124,000 tons of naphtha out of its yearly output of 15 million tons.

But with petrol demand growing by 13-14 per cent and diesel by 8-10 per cent, there will not be any fuel left for export, he said. The refinery will produce 5.97 million tons of diesel, 3.4 million tons of petrol, 1.45 million tons of kerosene/ATF, 536,000 tons of LPG, 124,000 tons of naphtha and 335,000 tons of sulphur, all of which will be for sale in domestic market. Some of 200,000 tons of propylene to be produced by the unit may be exported, he said.