Chennai Petroleum Sees Two Year Delay in Building New Refinery

Reuters, April 29, 2024

India's Chennai Petroleum Corp Ltd (CHPC.NS) will build a 180,000 barrels per day (bpd) refinery at Nagapattinam in Southern Tamil Nadu State by the end of 2027, two years later than initially planned, its head of finance Rohit Kumar Agrawala said on Monday.

India, the world's third biggest oil consumer and producer, is expanding its refining capacity as it is expected to be the largest driver of global oil demand growth between 2023 and 2030, according to the International Energy Agency.

Chennai Petroleum initially planned to complete the refinery by the end of 2025.

The company recently changed the capital structure of the joint venture building the project, with its parent company Indian Oil Corp (IOC.NS) controlling a 75% stake and Chennai Petroleum the remainder.

The joint venture is awaiting approval from the government on the new equity structure, Agrawala said, adding that 36 months would be needed from then to complete construction of the plant and three months for commissioning.

He said the project cost had also been revised to about 364 billion rupees ($4.36 billion), with about 66% of that to be met through debt. In a recent stock exchange filing, Chennai Petroleum had pegged the previous cost at about 294 billion rupees.

Chennai Petroleum also operates the 210,000 bpd Manali refinery at Chennai in southern Tamil Nadu state.

Agrawala said his company planned to shut some units at the Manali refinery for a month-long maintenance in July-August.

(Reporting by Nidhi Verma; Editing by Mark Potter)

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