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IOT Infra Plans To Manufacture Bio-CNG In Tamil Nadu
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Press Release [FREE Access]
Petro Intelligence Ľ RILís Pre-emptive Surgical Strike?

By R. Sasankan

“Water, water, everywhere,
And all the boards did shrink;
Water, water, everywhere,
Nor any drop to drink.”

– Coleridge, The Rime of The Ancient Mariner

India is a vast country with seemingly no shortage of land to house industrial projects. But you might have good reason to revisit that notion given the trouble that the Maharashtra government and the promoters of the proposed 60 MTPA Ratnagiri Refinery and Petrochemicals Ltd (RRPL) are facing in acquiring land for the project.

It had seemed like a good idea when the five-member consortium comprising Saudi Aramco, ADNOC, IOC, BPCL and HPCL decided to scout for land on the west coast of India in the state of Maharashtra. The choice of Ratnagiri could not be faulted: Indian Oil Corporation (IOC), the original sponsor of the project, had decided that the mega refinery should be on the west coast as it eminently suited crude oil exporters of the Middle East,

An agreement was quickly signed and the stake that each member in the consortium would hold in the project was decided. And that is when it ran smack into trouble.

Blame it on the Singur Syndrome. Over a decade ago, this rural outpost in West Bengal’s Hooghly district was gripped by Mukesh Ambaniunrest when farmers rallied to protest against the acquisition of about 1000 acres of their land for Ratan Tata’s dream car project: the Nano, the small runabout that was to be priced at Rs 100,000 and was expected to revolutionise the world of automobiles in the country.

But that dream soon turned into a nightmare. Mamata Banerjee, the Trinamul Congress leader, used that agitation as a rallying cry against the Left Front government that had ruled the state for 34 years and eventually succeeded in running the Communists out of its last citadel in the country.

The farmers in Ratnagiri district have risen in revolt against the mega refinery project and have drawn the support of the Shiv Sena, the embittered and now hostile partner of the ruling BJP coalition in Maharashtra. Ratnagiri is an ecologically sensitive region and the locals refuse to be tempted by offers of job opportunities. There are no external forces behind the agitation. Land acquisition has become a politically sensitive issue in India and no ruling party can afford to run roughshod over the feelings of the newly assertive farming community.

This looks like a re-run of the pitched battle in Singur – a possible outcome that has left the BJP a little wary of trying to force its will on the farmers of Maharashtra. The memory of what happened to the Buddhadeb Bhattacharya-led Left Front government is still too raw and politicians who choose to ignore the lesson run the risk of imperiling their political careers.

The agitation in Ratnagiri has left the Narendra Modi government in a quandary. It has been desperately trying to woo the Saudi government, Aramco and ADNOC to invest in India’s oil and gas sector. With Saudi Arabia and United Arab Emirates ready to invest in India, the Modi government cannot allow the refinery project to collapse because of the problems with land acquisition in Maharashtra.

Refinery pundits have started to speculate about the possibility of shifting the location for the project to the Gujarat coast that houses the world’s largest refinery complex at a single location which belongs to Reliance Industries Ltd (RIL). The state also has the 20 MTPA refinery of Nayara, which the Russians acquired from the Essar group and is now operated by Rosneft. Mukesh Ambani - controlled RIL is believed to have decided to expand the capacity of its refinery complex by 50 per cent.

The Gujarat coast has several spots like Jamnagar, Vadinar and Mundra that are well developed and have the port infrastructure that would make an ideal location for many industrial projects.

A new mega refinery here could potentially knock the spots off the existing refineries at Jamnagar and Vadinar. RIL has not formally announced its refinery expansion plan. So far, there has been only speculation in the media. RIL recently expanded the capacity of its refineries to a total of 68.2 MTPA (with the capacity of the domestic refinery placed at 33MTPA and that of the SEZ refinery at 35.2 MTPA). Nayara is also reportedly planning to double the capacity of its refinery at Vadinar.

The RIL management knows how to protect its interests and it can move rapidly when it want to counter a potential rival. It makes a lot of sense for RIL to announce a huge, open-ended expansion plan for its refinery. But they have kept everyone guessing about their plans. The strategy seems to keep its rivals off balance by making them wonder whether it will go through with its expansion or not. The fact, however, remains that RIL can execute its expansion plan in the swiftest possible time. RIL is believed to have already obtained environmental clearances for the expansion of the refineries.

Industry circles contend that RIL is not interested in scuttling the mega refinery proposed in Maharashtra. It has very friendly relations with the Saudi kingdom and Aramco. RIL’s focus is on exports of petroleum products and one of its refineries is in the Special Economic Zone. Like any other industry major, it could be a little possessive about Jamnagar and its adjacent areas, which is quite natural. But that is about it at the moment.

So, what will happen to the mega refinery in which Saudi Aramco is the star player? The proposal has not been placed before the Saudi king for his final approval. His decision normally cannot be influenced. However, the Saudi administration seems to be sincere in its decision to invest in India. But uncertainty over the refinery location may force it to reconsider the decision which would be a massive setback for the Modi government which has been trying to showcase a massive project that will demonstrate foreign investors’ faith in his administration. He has been out of luck so far.

The Modi government will have to find a suitable location for the mega refinery project. Neither Goa nor Kerala, the two other states on the west coast, can accommodate such a huge refinery. The Mangalore coast has no land to spare as MRPL is finding it difficult to go through with its expansion plans. A resolute move either by the Maharashtra government or the Centre looks extremely unlikely before the general election scheduled next year. The only sensible option, therefore, is to shift the refinery project to a location on the Gujarat coast.

And that is why RIL’s strategy assumes so much significance.

 



To download the latest issue 'Volume 25 Issue 19 - January 10, 2019', click here
Petro Intelligence [FREE Access]
Clash Of Egos Bedevil Mega Refinery Project
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Saudi Tweet Stokes A Storm Of Speculation
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RILís Pre-emptive Surgical Strike?
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One-Buck Dilemma For Private Fuel Retailers
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Foreign Investment
Oilex Cambay JV Receives Payment From Partner
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Iran May Invest In Chennai Petroleum Expansion
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Overseas Investment
OVL Discovers Oil In Colombia
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Gas Scene
Capacity Utilization of Gas Pipelines
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Update: PNG Connections
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LNG Import Projection By Industry Group
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Status Of Gas Pipelines Under Construction
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Trends In Domestic Natural Gas Price & International Bench Marks
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Capacity Utilization of LNG Regasification Terminals
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Domestic Gas Scene In November 2018
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Story Of Two LNG Terminals Of Petronet LNG Ltd
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CNG Growth Over The Years & CNG Sales as on 1st April, 2018
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LNG Terminals in India
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CGD Factsheet As Of Sept 2018
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A total picture about Natural Gas scene including CBM in India
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State-Wise Share In CGD Business
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Update: Sectoral Consumption of Natural Gas, LNG Import and Total Net Available Gas for Sale
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Declining Rate Of Gas Flaring In ONGCís Fields
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Natural Gas In Indiaís Energy Basket
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Data Section
Monthly Upstream Data
Monthly Downstream Data
Historical database
Data Archives
Special Database
Oil Import - Volume And Value
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Major End use of petroleum products in India
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Fuel & Loss In Indian Refineries: An Update
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Update: Distillate Yield of PSU refineries
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Bharat Petroleum Corporationís Impressive Refining Coverage
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Update: High Sulphur (HS) & Low Sulphur (LS) crude oil processing
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Power deficit: Region-wise position for November 2018
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India Imports Less Petroleum Products In November 2018
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Crude Oil Import From OPEC Goes Up In April- November 2018
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OILís In-House Capabilities & Infrastructure to support E&P Activities
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Weightage of crude oil, natural gas and petroleum products in Wholesale Price Index (WPI)
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Indiaís Shrinking Exportable Surplus Of Petroleum Products
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BPCLís Global Upstream Footprint
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Update: Status of blocks under NELP as on 1st November 2018
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Production Of Petroleum Products From Natural Gas / Fractionators
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Imported Crude & Domestic Crude Oil Processing
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Capacity Utilisation of Crude Oil Pipelines of IOC, OIL, Cairn, BORL, HMEL
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Declining Capacity Utilization of ONGCís Crude Oil Pipelines
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FOB Price Of Indian Basket Of Crude Oil
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Tenders [FREE Access]
ONGC
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ONGC
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