Cuddalore refinery project achieves financial closure

Chennai: Nagarjuna Oil Corporation announced that it had completed financial closure for its Rs 4,790-crore, 6-million-tonne petroleum refinery at Cuddalore, Tamil Nadu. Work on the project has begun and the refinery is expected to be commissioned by mid-2011.

This brings to fruition a long-pending investment in the State, for Nagarjuna Oil had proposed to set up the refinery at least six years ago. It purchased an existing refinery at Woerth, Germany, that belonged to Mobil, dismantled it and brought it to Cuddalore. For many years, through the days of wafer-thin refining margins, the refinery had lain in parts at the site, waiting to be erected. Caltex was to be an equity partner for the venture, but the US company decided to close its operations in India.

A few years later, the Tatas came in as an equity partner. Also, as crude prices rose, gross refining margins too rose in tandem, and the project became viable.

Today, Tata Petrodyne has a 30 per cent stake in the Rs 1,590-crore equity of the project and Nagarjuna Fertilisers has 51 per cent. The Tamil Nadu Industrial Development Corporation with 5 per cent stake, Cuddalore Port Company with 10 per cent and Udhe, Germany with 4 per cent are the other equity partners.

The Rs 3,200-crore debt is funded by a 16-member consortium of banks led by IDBI Bank.

When in operation, the refinery will produce 870,000 tonnes of petrol a year, 2,371,000 tonnes of diesel (including 864,000 tonnes of Euro IV specifications); 556,000 tonnes of LPG; 450,000 tonnes of kerosene and ATF and 220,000 tonnes of naphtha.

At a press conference here today, the company’s Chairman, Mr K.S. Raju, said that the refinery’s gross refining margin would be $8.5 a barrel, assuming crude oil sells at $60 a barrel. At higher prices of crude, the refining margin will be higher. The 6-million-tonne refinery will process 1,25,000 barrels a day.

The company has plans to raise capacity to 15 million tonnes by 2013-14.