Oil and Natural Gas Corporation Ltd said on Saturday it has signed a preliminary agreement with the government of the southern Indian state of Andhra Pradesh to set up a refinery there.
ONGC Chairman Subir Raha told reporters that the refinery at Kakinada, with a capacity of 5.0-7.5 million tonnes a year, or 100,000 -150,000 barrels per day (bpd) will be set up at a cost of about 55 billion rupees ($1.26 billion).
ONGC would hold 20 percent of the refinery venture, its subsidiary Mangalore Refinery and Petrochemicals Ltd (MRPL) 26 percent, financial institution IL&FS 51 percent and the Andhra Pradesh Industrial Infrastructure Corp 3 percent.
The project was expected to be completed within 40 months of financial closure, he said. ONGC is increasing its refinery capacity in anticipation of sharp growth in domestic demand. The company had said earlier it also plans to set up a 100,000-150,000 bpd refinery in the desert state of Rajasthan, while MRPL plans to expand its capacity to 300,000 bpd from 194,000 bpd.