ONGC's last month exit from the US$7 bln refinery and petrochemicals plant in Kakinada (150 km away from Vishakhapatnam) has led to the steel baron Laxmi Mittal, French oil major Total, HPCL, GAIL and OIL to take a final call on whether to construct a US$6 bln refinery and petrochemical complex in Vishakhapatnam (Vizag), Andhra Pradesh. The pre-feasibility study is in process and the year end will determine the further progress on the development. If finalized, the project is expected to take 4-5 years for completion.
The agreement signed last October between the five aforementioned companies proposed construction of a 15 mln tons refinery and 1 mln ton petrochemicals complex in Vizag. For feasibility isssues, the refinery capacity had been reduced to 14 mln tons.
The future of this project does not seem very much in doubt. As per analysts, the export-focused refinery seems undoubtedly feasible as there is good market for petroleum products in South East. Also, industry sources expect the refinery to later sell oil product in domestic product as well as Indian demand for petroleum products is rising by 5 mln tpa. As a result, HPCL is planning to double the capacity of its current 7.5 mln tons refinery in Vishakhapatnam.