Finance minister P. Chidambaram with petroleum minister Murli Deora at Panipat in Haryana on Friday. Picture by Ramakant Kushwaha

Panipat, Jan. 12: Indian Oil Corporation (IOC) is planning a capital expenditure of around Rs 7,500 crore in 2007-08 to upgrade its refineries, chairman Sarthak Behuria said here today.

He said the bulk of the outlay would be in the naphtha cracker unit here and the refineries in Haldia and Gujarat.

He said IOC would invest Rs 2,000 crore in a joint venture with Reliance Industries to sell natural gas to households and compressed natural gas (CNG) as an auto fuel through the proposed pipelines of Reliance.

“We have initiated talks for a 50:50 joint venture for city gas distribution projects along the pipeline Reliance Industries is laying from its offshore KG basin field,” Behuria, who was here to mark the occasion of the capacity of the IOC refinery being raised to 12 million tonnes per annum (mt), told journalists here today.

Reliance is planning pipelines from Kakinada in Andhra Pradesh to Haldia, Chennai and Ahmedabad.

The proposed joint venture will also supply gas to cities along the route of the pipelines.

He said the venture will cover 10 cities in the first phase, including Calcutta, with investment per city being Rs 200 crore.

Finance minister P. Chidambaram, who dedicated the refinery expansion to the nation, said his ministry would consider the oil ministry’s proposal to grant infrastructure status to the pipelines.

“Pipelines are as important as roads and railway tracks. We should regard them just the way we regard railway tracks and roads,” Chidambaram said.

The government has granted roads and railways infrastructure status, which gives a ten-year tax holiday to companies investing in these.

Petroleum minister Murli Deora sought tax rationalisation on petroleum products and infrastructure status to oil and gas exploration as well as pipelines.

Oil exports

Export of petroleum products jumped to $10 billion in the first six months of the current fiscal and are expected to top $20 billion for the full fiscal, the government today said. “The petroleum sector emerged as the top exporter, surpassing traditional gems and jewellery exports,” Deora said.

Oil products’ exports in the April-September period last year were $8.3 billion.

Year 2006 witnessed an addition of 16.5 million tonnes refining capacity in the country, raising the combined capacity of the 19 refineries to 149 million tonnes per annum. Deora said 2006 saw a spurt in oil discoveries in India with a total of 31 discoveries, involving companies like ONGC, OIL, RIL and Cairns Energy.

Indian companies also achieved significant breakthroughs in acquiring oil & gas blocks in several countries such as Vietnam, Cuba, Nigeria, Brazil, Gabon, Libya, Yemen, Myanmar, Iran And Syria. The minister said sourcing of natural gas from Iran, Myanmar and other countries is also being pursued.