The Ratnagiri Refinery and Petrochemicals (RRPCL) project, stuck for more than a decade over protests by locals, could be further hampered as key overseas investors seem to be having second thoughts. Abu Dhabi National Oil Company (Adnoc) is said to have withdrawn from the project in Maharashtra, while Saudi Aramco wants the terms of participation reviewed, said industry officials aware of the developments.
The refinery was originally proposed as a JV between Aramco, Adnoc, and state-owned oil marketing companies Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL).
Aramco and Adnoc were to jointly own 50 per cent of the project, with the remainder held by the three OMCs. It was slated for commissioning by 2022, but the project has yet to take off due to delays in land acquisition.
“Adnoc is said to have withdrawn from the project due to other priorities and Saudi Aramco has sought to revisit the terms,” said one of the officials cited above, requesting anonymity.
Aramco declined to comment. Adnoc, IOC, BPCL and HPCL didn’t respond to email queries.
Industry officials highlighted that Aramco is meanwhile keen to partner BPCL in developing a proposed 9-12 million metric tonnes per annum (mmtpa) refinery-cum-petrochemicals complex near Ramayapatnam port in the Nellore district of Andhra Pradesh. The initial investment for the project is estimated at around `96,000 crore.
BPCL has already inked a memorandum of understanding with state-run Oil India Ltd, which is set to acquire a 10 per cent stake in the Andhra Pradesh refinery. Discussions with other potential partners, including Aramco, are ongoing. Aramco may acquire a 20 per cent stake in the project, the officials said.
BPCL’s Andhra project, which will have a petrochemical intensity of around 25 per cent, is being prioritised for its coastal location, efficient crude logistics, and strong downstream demand.
BPCL’s earlier plans to set up a refinery in Prayagraj, Uttar Pradesh have been deferred, while the proposed Ratnagiri refinery remains uncertain due to land acquisition issues.
“Land is the single biggest risk factor,” said a second industry official. “Unless parcels are clearly identified and frozen, projects of this scale cannot move forward.”
India’s demand for petrochemicals is expected to remain strong and is seen as continuing to be a key driver of the country’s oil and gas demand in the future. India’s petrochemicals sector, the second-largest consumer of crude oil, accounts for 15 per cent of domestic demand.
In this light, RRPCL was conceived to meet India’s fast-growing demand for fuels and petrochemicals, and on completion, would have been ranked among the world’s largest refining and petrochemical projects.
The plan was to set up RRPCL as a 60 mmtpa refinery in Maharashtra at the cost of over `3 lakh crore. Meanwhile, to meet the rising petrochemicals demand, state-run ONGC too is also planning to set up a 12 mmtpa oil refinery costing around ₹1 lakh crore in Gujarat. This would make it the first time that ONGC, an oil explorer, is setting up a refinery. Engineers India Ltd is working on a pre-feasibility study for both BPCL and ONGC.
“Since the investment will be huge, ONGC — and BPCL (Andhra refinery) will necessarily need an international partner,” said the first official cited above. For ONGC and BPCL, expanding into the petrochemicals segment will help them diversify revenue sources and reduce cash flow volatility.
