Friday, Jul 17, 2009
By Sunil Raghu
Of DOW JONES NEWSWIRES
MUMBAI (Dow Jones)--India's Bharat Petroleum Corp. (500547.BY) may decide by December on selling a stake in Bharat Oman Refineries Ltd. through either an initial public offering or an institutional placement, its chairman and managing director said.
Bharat Oman Refineries Ltd. is building a 120,000-barrel-a-day refinery at Bina in central India's Madhya Pradesh state. State-run refiner BPCL owns 74% of the project, with Oman Oil Co. holding the remainder.
Ashok Sinha told Dow Jones Newswires in a recent interview that a decision on the stake sale may be taken toward the end of this year, closer to the mechanical completion of the refinery.
"It may be even later," he said, adding, the refinery's final ramp-up to full production is likely during January-March next year.
"Almost 95% of the refinery is complete and fund requirement is not substantial now," Sinha said. "So, there is no pressing rush to off-load stake to anyone."
He said the refinery has already received INR70 billion of funds and it doesn't need significant additional financing, including from Oman Oil Co. "We will need around INR5 billion (more) and it is not that much."
BPCL has started testing the refinery's crude receipt and dispatch facilities comprising a single-point mooring system and a crude-oil terminal at Vadinar in western India's Gujarat state and a 935-kilometer pipeline from Vadinar to Bina, Sinha said.
Designed to process Arab-Mix crude, which comprises 65% Arab Light and 35% Arab Heavy, the new refinery will operate initially using Arab Mix but will gradually progress toward processing other types of crude as well, he said.
After the completion of the Bina refinery, BPCL will have about 30 million metric tons of products for sale, sufficient for its marketing needs, Sinha said.
Reduced Borrowing
BPCL has reduced its outstanding borrowing to INR170 billion-INR180 billion from INR270 billion previously, Sinha said.
He also said the company plans to invest INR30 billion on new projects in this financial year that began April 1.
"Of this, INR20 billion will be spend on upgrading Mumbai and Kochi refineries to Euro-III and Euro-IV emission norms by April next year, INR8 billion on minimum-work program at various exploration blocks across the globe and the rest for other projects," he said.
BPCL also plans to add 400-500 retail outlets to its existing network across the country in the current fiscal year, Sinha said.
"This year is more a year of consolidation for us and would look at new opportunities after the end of this fiscal" year, he said.
On the crude oil offered by Cairn India Ltd. (532792.BY) from its Rajasthan fields, he said it might not be technically feasible for BPCL to take Cairn India's crude.
"It is not that I don't want to, but my both Mumbai and Kochi refineries are not technically geared up to utilize Cairn crude," he added.
He said BPCL is buying products from Reliance Industries Ltd.'s (500325.BY) Jamnagar refinery complex in western India, but declined to elaborate.
-By Sunil Raghu, Dow Jones Newswires: +91-11-4356-3305; santanu.choudhury@dowjones.com
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(END) Dow Jones Newswires
17-07-09 1039GMT
