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Vedanta eyes stake in a new Rajasthan refinery

Company will support the upcoming refinery in Barmer by having a small stake in the project

Press Trust of India  |  New Delhi 

Close on the heels of Hindustan Petroleum Corp Ltd (HPCL) reviving the Rajasthan refinery project, London-based mining group Vedanta has evinced interest in taking a small stake in the 9 million tonnes a year project.

Vedanta Group Chairman Anil Agarwal met Rajasthan Chief Minister Ashok Gehlot to discuss the issue of the proposed refinery in the state.

"With a positive gesture, he (Agarwal) expressed his interest in participation in this ambitious project," the Rajasthan government press statement said.

Stating HPCL and the state government were in discussions about the refinery, it said: "He (Agarwal) assured the Chief Minister that Vedanta would support the refinery by having a small stake in the project".

HPCL has expressed interest in building a 9 million tonnes refinery at the Barmer oil find of Cairn India, which was last year acquired by Vedanta for $8.67 billion.

Oil and Natural Gas Corp (ONGC), which owns 30% interest in the Barmer oilfields of Cairn India, had in 2005 committed to building the refinery but later started soft-peddling the project.

Sources said HPCL has now entered the fray and has proposed to take 51% stake in the project. ONGC, which originally had the authorisation from the government for processing the Barmer crude at the proposed refinery, would hold 26% interest.

Engineers India Ltd (EIL) has evinced interest in taking 5% stake in the project.

Cairn India, which holds 70% interest in the fields, currently produces about 175,000 barrels per day oil (8.75 million tonnes a year) from the Rajasthan fields and has potential to go up to 300,000 bpd (15 million tonnes).

Sources said Rajasthan government has started the process of land acquisition of about 926 hectares.

The state government may also take equity in the project besides giving fiscal concessions like 50% exemption in excise duty to make it viable.

"Gehlot while continuing his efforts for overall development of state including set up of a refinery in Rajasthan, on Friday evening he met with Prime Minister Manmohan Singh, Home Minister P Chidambaram & Deputy Chairman of Planning Commission Montek Singh Ahluwalia and discussed various development issues specially on infrastructure development," the statement said.

The Chief Minister assured full support of the government in achieving the target of 300,00 bpd from Barmer.

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First Published: Sun, July 08 2012. 14:32 IST