Iran to double investment in Indian oil refinery
07 January 2019
Iran will invest about Rs. 1,500 crore to expand a refinery run by Chennai Petroleum Corp., the company’s managing director said, amid U.S. sanctions on the Persian Gulf nation that have severely hit its oil exports.
The state-run company is boosting capacity at its Nagapattinam facility by nine-fold to process 9 million tons per year and the investment is Naftiran Intertrade Co.’s share of the Rs. 27,500 crore (USD 4bn) expansion plan, Managing Director S.N. Pandey said.
While Naftiran’s investment will ease the Chennai Petroleum’s fund raising task, it will ensure Iran maintains its grip in India, where surging fuel demand has turned it into a prized market for global oil producers. For India, Tehran has been a reliable and cheap source of crude extending favourable credit terms, a key driver for New Delhi to convince Washington to grant some exemption from sanctions that restrict trade with the country.
Chennai Petroleum is building a petrochemicals plant of about 475,000 tons per annum capacity, Pandey said. The new plants will enable the refiner to process dirtier and cheaper crude, apart from making more value added products. This year, it imported Iraq’s Basrah heavy crude for the first time and is now looking get shipments from the U.S., Pandey said.
The detailed feasibility report for the expansion project, that includes the petrochemicals plant, is expected to be ready by June. “Tentatively by December 2022, the whole complex will be ready,” Pandey said.