RIL group hopes to have world's largest refinery
The Mukesh Ambani-led group hopes to build the refinery by Dec 2008 with a $6 billion facility.india Updated: Mar 30, 2006 11:55 IST
The Mukesh Ambani-led Reliance Industries group hopes to build the world's largest oil refinery at a single location by December 2008 with a $6 billion facility in this Gujarat port town with a capacity of 29 million tonnes per annum.
The mega project, which will come up close to the company's existing 33 million tonne refinery, is being implemented through a new company, Reliance Petroleum, which hopes to float a public offer soon - the group's first in 13 years.
The new company's entire produce will be sold overseas, since it is being set up as a special economic zone that has benefits such as complete tax exemption for five years and 50 percent waiver for another five.
"We are at historic crossroads. Our refinery is coming up at a time when there is a huge demand-supply gap for fuel products," said Hital Meswani, director of Reliance Industries, the only Indian private company in the Fortune 500 list.
"The refinery will be capable of handling both sweet and sour crude and that is expected to give us that extra refining margin since the light-to-heavy crude differential is at a historic high," Meswani said.
"The Unites States and Europe are the main markets we will target for export of our products. It will include gasoline, middle distillates like diesel and jet fuel and kerosene."
The group's existing unit here, with a capacity of 660,000 barrels per day is the world's largest grassroots refinery - the largest facility constructed at one go from scratch - and also the third largest at a single location.
Only Paraguana Refining of Venezuela, with a capacity of 940,000 barrels a day, and SK Corp of South Korea, with 817,000 barrels a day, have higher capacities at a single location, company officials said.
With the new facility, they explained, the combined capacity will go up to 1.24 million barrels a day at Jamnagar.
Speaking about the financing, Meswani said, Reliance Petroleum hopes to raise $3.5 billion as debt and another $2.5 billion as equity, including the proceeds from the public issue. "The Reliance group hopes to hold 80 per cent stake."
The Reliance Industries group also hopes to reserve a part of the equity in the public offer - for which the expected premium band is yet to be ascertained - for what are called qualified institutional buyers.
A preliminary agreement has already been reached with some banks and financial institutions for a syndicated term loan of approximately $1.5 billion while $1.5 billion is being sought from export credit agencies, officials said.
The new facility will also have a new polypropylene plant with a capacity of 0.9 million tonnes per annum and has Bechtel France and Exxon and UOP of the US as contractors, technical advisors and licensors, respectively.
In addition to setting up the new facility, Reliance Petroleum will also expand the jetty at the Jamnagar port to handle additional inflows of crude oil for processing and for the export of products.
Besides, the capacity for captive power generation will also be doubled from the present 500 megawatt.
First Published: Mar 30, 2006 11:05 IST