Oil India keen to pick up 15% stake in HPCL

After Vedanta Resources , state-owned Oil India has evinced interest in taking a stake in Hindustan Petroleum Corp Ltd’s planned 9 million tonnes a year refinery in Rajasthan. Cash-rich OIL is keen to take up to 10-15 percent stake in refinery HPCL plans to build near the Barmer oil finds of Cairn India.

Sources said preliminary discussions have been held but nothing has been finalised so far. HPCL is to hold 51 percent stake in the $4 billion project while state-owned engineering consultancy firm EIL would take 5 percent.

Vedanta Resources, which last year acquired Cairn India for $8.67 billion, is interested in taking a small equity of up to 5 percent in the project. State explorer Oil and Natural Gas Corp (ONGC), which owns 30 percent interest in the Barmer oilfields of Cairn India, had in 2005 committed to building the refinery in Rajasthan but later had a change of heart.

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Sources said after HPCL decided to take up the project, ONGC, which originally had the authorisation from the government for processing the Barmer crude at the proposed refinery, too evinced interest in taking 26 percent stake.

However, HPCL is not keen on giving anything more than 16.96 percent to ONGC. This being equivalent to the stake that ONGC has allowed HPCL to hold in Mangalore Refinery and Petrochemicals Ltd.

HPCL was equal promoter of MRPL with Aditya Birla Group but its stake was pruned after ONGC bought out the ABG.

Cairn India, which holds 70 percent interest in the Barmer oilfields, currently produces 175,000 barrels per day of oil (8.75 million tons a year) from the Rajasthan fields and has plans to take it up to 300,000 bpd (15 million tonnes).

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Sources said Rajasthan government has started the process of land acquisition of about 926 hectares for the refinery project. The state government may also take equity in the project besides giving fiscal concessions like 50 percent exemption in excise duty to make it viable.

PTI