HPCL’s Barmer refinery is likely to be India’s first such plant to source its entire crude domestically from Cairn India’s nearby fields.
The 9-mt-a-year refinery, set to begin operations in 2018, would be fed by Cairn’s fields if the Vedanta Resources-controlled company manages to ramp up production to 3 lakh barrels of oil a day from the current levels of 1.75 bopd, HPCL officials said.
Cairn India has submitted an integrated block development plan to the oil ministry, outlining its production targets. Oil minister Veerappa Moily said the ministry was working to clear all the hurdles with IBDP.
Congress chairperson Sonia Gandhi on Sunday laid the foundation stone for the project. If Cairn fails to meet its production targets, up to 50% of the crude would have to be sourced from Latin America. The crude found in Rajasthan is similar in nature to the Latin American crude, which is waxy and has a higher sulphur content. Currently Cairn sells crude from Rajasthan to Essar and RIL in Gujarat. But these refineries can process only 15% of the heavy crude from Rajasthan, said Moily.
“The refineries of crude produced from Cairn blocks such as Reliance and Essar is not tuned to take such high sulphur waxy crude in a higher quantity,” Moily added.
The refinery would add another 6 million tonne capacity from the current 9 mt if production is higher by 2017. The shifting of the refinery from its earlier location of Leelala to Pachpadra has saved HPCL atleast R1,000 crore, according to the company sources.
HPCL had registered 4,800 acres of land from the Rajasthan government at a price of Rs 30 crore last week for the refinery.
When it started production in 2009, Cairn was producing only 25,000 barrels of crude oil a day. Now it has increased to 175,000 barrels a day and it is expected to rise to around 215,000 barrels by the end of 2013-14, according to the company.
So far, the company has discovered 26 blocks in Mangala. The number is only set to increase with the company looking to invest another $2 billion in the Rajasthan block on exploration in the next two years. An oil ministry official said that the reserves with Cairn would be higher than the 4.5-million tonne per annum estimate.
