India’s state-run Chennai Petroleum Corp., in which Iran has a stake, plans to spend about 200 billion rupees ($3 billion) for a ninefold capacity boost at one of its refineries to quench the South Asian nation’s increasing thirst for fuel.
Indian Oil owns 51.9% of Chennai Petroleum, while Naftiran Intertrade Company, an affiliate of state-run National Iranian Oil Company, holds 15.4%, Bloomberg reported.
"The unit of the nation’s biggest refiner, Indian Oil Corp., seeks to expand capacity at the Nagapattinam plant in the southern state of Tamil Nadu to as much as 180,000 barrels a day from the current 20,000 barrels," said Gautam Roy, the managing director of Chennai Petroleum.
“We will complete studying the expansion plan by early next year and then seek approval from the board,” he said in an interview in New Delhi. “We have land available at the refinery site for expansion.”
Chennai Petroleum, along with its parent Indian Oil and peers such as Hindustan Petroleum Corp. and Bharat Petroleum Corp., are racing to add refining capacity amid rising fuel consumption that is expected to outstrip all other nations in the decades ahead.
However, India's Petroleum Minister Dharmendra Pradhan said last month that there were some technical issues in expanding Chennai Petroleum, such as those related to the shareholding of the state-owned National Iranian Oil Company. According to reports, the Indian government has been looking into buying Iran's stake and to merge it with the Indian Oil Corporation Ltd.
The country’s 23 plants have a total capacity of 230 million tons a year, while total fuel demand was 183.5 million tons during the financial year that ended March 31, according to the oil ministry.
India has formed a group comprising refiners and government officials to assess the nation’s primary energy requirement by 2040 and prepare a roadmap for expanding plants to meet rising demand. Indian Oil will spend $6 billion to boost capacity by almost 30% in the next six years.
Rising demand amid low oil prices has boosted earnings of Chennai Petroleum in the 12 months through March 31, after three straight years of losses.
