BP eyeing HP, refinery stake

By agencies   |   Wednesday, 12 October 2005, 19:30 IST
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Mumbai: Oil major BP is signing an agreement with Hindustan Petroleum Corp. Ltd (HPCL) to acquire stake in one of the state-run company's new refineries, a HPCL source said. BP’s Chief Executive John Browne is expected to sign the memorandum of understanding (MoU) with HPCL’s Chairman M B Lal for equity participation in one of two new refineries in Bhatinda and Visakhapatanam (Vizag). The HPCL source said that the company has offered BP both Bhatinda and Vizag refineries, now its up to them to select any one. The MoU may become a firm joint venture if BP shows interest in a proposed new 300,000-barrels-per-day (bpd) refinery in Visakhapatanam in the southern state of Andhra Pradesh, he said. "We have already offered BP a 26 per cent stake in Bhatinda," he said. The Indian company had also offered the 26 per cent to firms such as Saudi Aramco, Malaysia's Petronas and France's Total. He said: “BP wants to foray into refining and marketing sector and we have made them the best offer.” An oil ministry official confirmed that BP was eyeing transportation fuels sector and may seek government permission to set up gas stations in the country. According to Indian government rules, companies wishing to set up petrol stations in India must invest 20 billion rupees in local energy infrastructure and the ministry official said it made sense for BP to invest this in a refinery. BP rival Royal Dutch/Shell has already received a government nod to set up 2,000 outlets in India. In the past few years the BP has invested about $900 million in India, mostly through Castrol India Ltd. and Tata BP Solar, a renewable energy JV with the Tata Group. India already has surplus refining capacity and has exported oil products since 1999, after Reliance Industries Ltd. set up its Jamnagar refinery that processes 660,000 bpd of crude. Reliance is investing $5.8 billion in doubling Jamnagar's capacity by 2008. Hindustan Petroleum already operates an existing refinery in Visakhapatnam, processing 155,000 bpd, and one in Mumbai that handles 158,000 bpd.

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