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After Mittal, Total quits $10-bn Vizag refinery
The fate of the $10-billion refinery-cum-petrochem project at Vizag in Andhra Pradesh hangs in balance as Total SA of France has reportedly decided to opt out. State-run Hindustan Petroleum Corporation (HPCL), which led the consortium with Oil India, GAIL India, Lakshmi N Mittal and Total, might put the project on hold.
Total SA's move comes after LN Mittal walked out of the project in November last year. The partners had carried out a pre-feasibility study for the project and were scheduled to take an investment decision in the second half of 2009.
An HPCL official, who did not wish to be quoted, said, "Total SA has communicated to our corporate planning division its decision to put their participation in the project on hold for the time being."
The official reiterated that the project is at a feasibility report level and it has not yet reached a stage of deciding on the equity structure. The five companies had only signed an MoU for looking at the feasibility of the project.
The official admitted that the current economic slowdown and lack of any concrete proposal from the Andhra Pradesh government for providing incentives may be the major reason behind Total SA's decision.
The global economic downturn has seen reversal of fortunes for refiners, with margins coming under severe pressure as fuel demand dropped in the US, Europe and South-East Asian markets.
The 14-million-tonne-a-year refinery was being planned to target South-East Asia and the Middle East. Fuel demand in Asia was at that time projected to rise by 5 million barrels a day in 10 years, but has since slowed. The petrochemicals plant was to have a one million-tonne capacity.
In December last year, the petroleum minister had informed Parliament that HPCL and its consortium partners would decide on the viability of the project in April-May. He had said the viability to proceed with the feasibility studies of this project would be once again reviewed in April-May.
