Iran keen to invest Rs 300 bn in CPCL expansion: IOC Chairman Sanjiv Singh

National Iranian Oil Co (NIOC), which holds 15.4% stake in CPCL, is keen to participate in the expansion project

Iran is keen to invest in the Rs 300 billion expansion of Chennai refinery but the fate of banking channels to route such investment is uncertain in view of US sanctions against the Persian Gulf nation, IOC Chairman Sanjiv Singh said on Monday.

IOC plans to pull down the 1 million tonnes per year Nagapattinam refinery of its subsidiary, Chennai Petroleum Corp Ltd (CPCL) and build a brand new 9 MTPA unit in next 5-6 years.

National Iranian Oil Co (NIOC), which holds 15.4 per cent stake in CPCL, is keen to participate in the expansion project, Singh told reporters here.

"They are open to investment but whether these channels (for investment) will be available post-sanctions is something we don't know," he said.

US sanctions against Iran will come into effect from November 4 and will block payment channels and even paying in US dollar or euros for crude oil that India imports from the Persian Gulf nation would not be possible.

Indian Oil Corporation (IOC) holds 51.89 per cent stake in CPCL.

Singh said the expansion was to originally cost Rs 27,460 crore but is now estimated to cost anything between Rs 25,000 crore and Rs 30,000 crore.

CPCL, formerly known as Madras Refineries Ltd, was formed as a joint venture in 1965 between the Government of India, AMOCO and NIOC having a shareholding in the ratio of 74 per cent, 13 per cent and 13 per cent.

In 1985, AMOCO disinvested, following which, the government held 84.62 per cent and NIOC 15.38 per cent.

The government later disinvested 16.92 per cent of the paid-up capital. The company was listed in 1994. IOC acquired the government stake in 2000-01 and holds 51.89 per cent stake in CPCL while NIOC has 15.40 per cent.

Asked about US sanctions against Iran impacting oil supplies, Singh said the company has "adequate alternate supplies" ready to meet any shortfall that may arise from Iran.

"We are a large importer of Iranian crude. We have till now taken on a proportionate basis whatever is our annual commitment," he said.

Stating that the banking channels are still open, he said the company has booked for offtake of Iranian oil for even September.

"We are observing the situation very very closely. We are fully ready for any cuts in Iranian supplies (because of sanctions)," he said. "IOC is fully prepared to take alternate supplies from alternate sources.