IOC raises Chennai refinery expansion cost to $4bn

Indian state-controlled refiner IOC has increased the cost of building a refinery in Chennai in southern Tamil Nadu state by 12pc to 330bn rupees ($3.96bn) and raised its stake in the joint venture to 75pc.

IOC and its subsidiary Chennai Petroleum (CPCL) earlier held a 25pc stake each in their joint venture Cauvery Basin Refinery and Petrochemicals (CBRPL), which was formed to build a 180,000 b/d refinery in Chennai by 2025. Financial investors were to make up the remaining 50pc equity.

The revised capital structure of CBPRL has 75pc equity from IOC and 25pc from CPCL, IOC said.

The company did not specify any reason for the increase in cost nor clarify if there was any change in the timeline for completion of the project.

IOC had in 2021 approved the starting of a new unit in Tamil Nadu to meet demand for oil products in southern India, adjacent to CPCL's existing 211,000 b/d Manali refinery.

The original 20,000 b/d Nagapattinam refinery in the Cauvery Basin was shut down for dismantling in 2019. It is currently undergoing extensive refurbishment and expansion works.

IOC had in December 2023 announced a one-year delay to the expansion of its Panipat refinery to December 2025, and an increase in the cost by 10pc to Rs362.25bn.

IOC's nine refineries processed 1.46mn b/d of crude during April 2023-February 2024, up by 1pc on the year, according to data from the oil ministry. CPCL's Manali refinery processed 232,000 b/d of crude during the same period, up by nearly 3pc on the year.

By Roshni Devi