The Indian Oil Corporation (IOC) has recently announced a 12% upward adjustment in projected costs for the expansion of its refinery in Chennai, located in the state of Tamil Nadu, bringing the investment to an equivalent of $3.96 billion. In addition, the corporation has increased its shareholding in the joint venture to 75%.
High production expectations
The shareholding distribution within the Cauvery Basin Refinery and Petrochemicals (CBRPL) alliance, aimed at building a refinery with a capacity of 180,000 barrels per day in Chennai by 2025, has also been modified. Prior to this adjustment, both IOC and its subsidiary Chennai Petroleum (CPCL) each held 25% of the shares, leaving the remaining 50% distributed among other partners. The new shareholding structure now has 75% of the shares in the hands of IOC and 25% in the hands of CPCL.
Despite the financial and shareholding structure changes,the corporation has not provided specific details on the reasons behind the cost increase nor has it indicated whether this will affect the expected completion date of the project.
By 2021, the green light had been given for the implementation of this project in Tamil Nadu with the objective of meeting the increased demand for petroleum products in the southern region of India, complementing the operation of CPCL’s existing 211,000 barrels per day capacity refinery in Manali.
Refinery expansion in Chennai
The original Nagapattinam refinery, with a capacity of 20,000 barrels per day located in the Cauvery Basin, was shut down in 2019 to begin decommissioning, initiating an extensive rebuilding and expansion process.
Notably, in December 2023, IOC announced a one-year delay in the expansion of its Panipat refinery to December 2025, along with a 10% increase in project costs.
During the period from April 2023 to February 2024, the nine IOC refineries will be operating from April 2023 to February 2024. IOC processed a total of 1.46 million barrels of crude oil per day, registering a 1% increase compared to the previous year. CPCL’s Manali refinery processed 232,000 barrels per day during the same period, which represents an increase of almost 3% over the previous year.
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Source: Indian Oil Corporation (IOC)
Photo: Shutterstock
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