Indian Oil to examine US sanctions’ impact on Chennai Petroleum Corp expansion

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New Delhi:  Indian Oil Corp (IOC) will consider the implications of US sanctions if Iran was to put money into its subsidiary Chennai refinery’s Rs 35,700 crore enlargement, its Chairman Sanjiv Singh mentioned.

IOC plans to drag down the 1 million tonnes per yr Nagapattinam refinery of its subsidiary Chennai Petroleum Corp Ltd (CPCL) and construct a model new 9 million tonnes unit within the subsequent 5 to 6 years.

Nationwide Iranian Oil Co (NIOC), which holds 15.four % stake in CPCL, is eager to take part within the enlargement mission, Singh mentioned.

Following the US resolution to reimpose financial sanctions on Iran, IOC will study the influence of NIOC investing additional in CPCL.

“We are evaluating that,” he mentioned, when requested concerning the influence of US sanctions on NIOC investing additional in CPCL.

NIOC’s funding in CPCL had been made a number of years again and that as such won’t draw any influence of US sanctions however recent investments within the firm must be studied.

“NIOC is keen to remain committed to investing in CPCL. Now we have to see (the impact of US sanctions on such a move),” he mentioned. “The (expansion) project has not been approved (by the board) yet.”

 Indian Oil to examine US sanctions impact on Chennai Petroleum Corp expansion

Representational picture. Reuters.

After the US reimposed full financial sanctions towards Iran starting 5 November 2018 and ended waivers six months later, India has stopped shopping for oil from its third-largest crude oil provider.

Previous to the waivers ending on 2 Could, India paid Iran for oil purchases in rupees. These rupee funds are made right into a UCO Checking account of NIOC.

The federal government had allowed NIOC to make use of the cash it obtained within the UCO Checking account for paying for commodities Iran buys from India in addition to for direct investments in Indian tasks.

Naftiran Intertrade, the Swiss subsidiary of NIOC, holds 15.four % stake in CPCL.

Whether or not the identical cash can now be invested by NIOC as its share of fairness portion of the enlargement mission is being evaluated by IOC.

IOC holds 51.89 % stake in CPCL.

The enlargement was to initially value to Rs 27,460 crore however is now estimated to value Rs 35,698 crore. Officers mentioned CPCL plans to realize monetary closure of the refinery enlargement in 2019.

It additionally plans to construct a petrochemicals plant of about 475,000 tonnes every year capability. Detailed feasibility report for the enlargement mission is predicted to be accomplished by June.

CPCL, previously referred to as Madras Refineries Ltd, was shaped as a three way partnership in 1965 between the Authorities of India, AMOCO and NIOC having a shareholding within the ratio of 74 %, 13 % and 13 %.

In 1985, AMOCO disinvested, following which the federal government held 84.62 % and NIOC 15.38 %. The federal government later disinvested 16.92 % of the paid-up capital.

The corporate was listed in 1994. IOC acquired the federal government’s holding in 2000-01 and holds 51.89 % stake in CPCL whereas NIOC has 15.40 %. CPCL has two refineries with a mixed refining capability of 11.5 million tonnes every year.

The Manali refinery has a capability of 10.5 million tonnes every year and is among the advanced refineries within the nation. Its second refinery is positioned in Nagapattinam at Cauvery Basin. This unit has a capability of 1 million tonnes every year.

CPCL refineries produce LPG, petrol, kerosene, aviation turbine gasoline (ATF), diesel, naphtha, bitumen, lube base shares, paraffin wax, gasoline oil, hexane, and petrochemical feedstocks.

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