Reliance-Aramco Deal Has No Impact On West Coast Refinery Project, Says HPCL Chairman
The West Coast Refinery project, which is likely to be moved to Raigad from Ratnagiri in Maharashtra due to public and political protests, is a joint venture of Saudi Aramco and HPCL, Indian Oil Corporation Ltd. and Bharat Petroleum Corporation Ltd.
The world’s largest crude oil producer holds a 51 percent stake in the 60-million-tonne project and has also roped in Abu Dhabi National Oil Company as a minority partner.
According to HPCL Chairman Mukesh Surana, the $15 billion Reliance-Aramco deal could be a part of Saudi Aramco’s strategy to secure a long-term client for its crude.
"It will not be right on my part to comment on what Aramco's strategy is. But my understanding is that they have got the capability to do both the projects (West Coast Refinery and Reliance).... I don't think it (Reliance-Aramco deal) will have any apparent impact on other discussions that are going on," Surana said in Mumbai on Wednesday night, adding that work on the West Coast Refinery project is on track.
Some analysts, however, view Aramco's deal with Reliance as a hedge against the cost escalation in the West Coast Refinery project—the Rs 1-lakh-crore refinery will now cost Rs 4 lakh crore to set up and the project may not even take off at all.
The West Coast Refinery was proposed to come up at Nanar, a village in Ratnagiri district, some 400 km south of Mumbai. However, due to continued opposition from the locals as well as the Shiv Sena, Bharatiya Janata Party-led Maharashtra government decided to relocate the project. Chief Minister Devendra Fadnavis recently said that the refinery would now come up in Raigad, about 100 km from Mumbai, but the location is yet to be finalised.
"As far as Aramco is concerned, they will be happy to have a destination for their crude for a long-term basis, and buyers will also be happy to have a long-term arrangement for an assured source of supply. So, to that extent, I don't see any contradictions in the two partnerships," said Surana.
When asked about the timeline for the West Coast Refinery project, he said, "I don't think we can give a timeline. This refinery will take five years to be completed but (decision) on the final investment destination has to be taken.”
"The configuration study work is in progress and multiple cases are being worked out depending on the changing demand-supply situation, and once that is frozen, there can be a comprehensive case."
On Thursday, HPCL shares fell 5.29 percent to Rs 226.35 apiece on the BSE while the benchmark Sensex shed 1.59 percent to end the day at 36,472.93 points.