Kuwait Petroleum Corp (KPC) is to pick up a minority stake in the Indian Oil’s planned Paradip petrochemical complex, as specified in an in-principle agreement that was reached during IOC chairman’s ongoing visit to Kuwait. Stake acquisition in the Paradip project is expected to facilitate long-term supply contracts to the refinery.
KPC and Saudi Aramco had initially declined to take a stake in the Rs 30,000 crore Paradip refinery-cum-petrochemical project without marketing rights for selling the products to Indian consumers. This was followed by the split up of the project into a 15 mln ton refinery and a 1 mln tpa petrochemical project, for divesting part of the latter. The refinery, which accounts for most of the project cost, is currently in early stages of construction and may not be able to meet the deadline for completion of 2012 as IOC struggles with a cash crunch enforced by punitive taxes and a capped pricing system for petrol and other products. Kuwait accounts for around 10% of India’s crude supplies and a stake in the Paradip project is expected to facilitate long-term supply contracts to the refinery.