IOC eyes Paradip stake sale

New Delhi, Nov. 10: Global energy players are keen to pick up a stake in the Rs 30,000-crore Paradip refinery, whose commissioning is likely to be delayed to the next fiscal.

“Several global players have shown interest in picking up stakes in the refinery project and petrochemical plant. Talks are at a preliminary stage. We are open to a strategic investor, however, we would continue to hold the majority stake,” R.S. Butola, chairman and managing director of IOC, said.

Global firms, who are keen to pick up stakes in the 15-million-tonne (mt) per annum refinery, include Kuwait Petroleum Corporation, Saudi Aramco, Petroleos de Venezuela SA and state-owned Iraq oil firm.

Sources said KPC and Aramco were also interested in picking up a stake in the 1-million-tonne petrochemical plant that was split from the refinery for building in the future.

Analysts said the entry of global players as a strategic investor would be a win-win situation for both players, but much would depend on the amount of stake IOC was willing to sell.

Several players such as Petronas of Malaysia and Abu Dhabi National Oil Company had earlier expressed their interest for equity participation in the project, but the move failed to take off as IOC was not willing to give a minimum 26 per cent stake in the company.

However, there is a growing optimism that IOC will relent, while retaining majority stake to have operational and management control.

The entry of global players could also enable smooth flow of supplies to the refinery, configured to process the toughest, heaviest and dirtiest crude. Such variety is cheaper than the cleaner and more easily processed varieties.

Equity stake to the Gulf nations, who are the major suppliers of crude to the country, will ensure assured supplies.

The IOC could earn more by processing the crude oil produced by Venezuela. The crude drilled out from the South American nation is one of the toughest to process and its processing will yield substantial gross refinery margin.

“The future strategy of the company would be to go in for a heavier variety of crude, which will improve the gross refinery margins. Strategic partnership will not come in the way of procuring crude from different sources,” IOC officials said.