The Indian Oil Corporation (IOC) will invest approximately up to $27 billion in its home country's oil and gas industry, the company said on Wednesday, while also confirming that it had entered talks with foreign entities for the construction of a "mega refinery" on the coast of the state of Maharashtra.
"In the next six years, we need to spend Rs 1.70-1.80 trillion on refinery expansions, new petrochemical projects which are coming up and expenditure being incurred on natural gas, besides some exploration blocks that we are actively looking at," IOC Chairman B. Ashok told attendees of the company's 57th annual general meeting in Mumbai.
Another $7.5 billion will invested in developing 24 million tons per year of liquid petroleum gas refining capacity over the next half a decade. New infrastructure to support the import and transport of LPG will come soon after, according to the IOC chief.
Ashok also said the $26.4 billion mega refinery project is a go. The state government has proposed six sites for the new 15,000-acre facility, of which IOC will hold a 50 percent stake. The company's sister companies, Hindustan Petroleum Corporation Limited and Bharat Petroleum, will own the remaining shares.
"We are eager to lead and contribute in the proposed mega refinery on the west coast, to be built jointly by the public sector oil marketing companies," the chairman said.
Unidentified international investors have entered into talks with IOC about participating in the project. If an agreement comes to fruition, the three domestic partners would dilute their shares equally, Ashok said.
The chairman declined to provide a specific timeline for the project, though he said the refinery would begin construction soon because domestic demand for quicker and cheaper energy has been rising with economic growth.
India's Petroleum Minister Dharmendra Pradhan said he expects the demand for crude oil in the country to rise in excess of 11 percent this year, thanks to "better monsoon rains" and growth in economic activity.
According to an Energy Aspects analyst Richard Mallinson, quoted by Bloomberg, oil consumption in India is likely to grow at a daily rate of 400,000 barrels this year and next, making it the fastest pace of consumption growth globally.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on… More