Gulf Oil plans crude, base oil refinery

Hinduja group-owned Gulf Oil Corporation is planning to set-up crude and base oil refinery in the country.

The company is keen to foray into the crude oil segment, which is supportive for the base oil refinery. Internal discussions are started for setting up a base oil refinery with an investment of Rs 800-1,000 crore (Rs 8-10 billion).

N C Sekharan, head- lubes, told Business Standard that GOCL was evaluating the scope of the refining business, but nothing has been finalised.

Industry analysts said, "Crude refinery would be supportive for the base oil plant, so the company might prefer to build a new refinery in the near future. In the current scenario, the investment for the crude refinery with a capacity of 12 million tonne per annum will be between Rs 8,000-10,000 crore (Rs 80-100 billion) and the base oil refinery will cost around Rs 1000 crore (Rs 10 billion)."

Sources close to the development said that the company was considering an option to attach the proposed base oil refinery to Oil and Natural Gas Corporation's Mangalore Refinery and Petrochemicals but that agreement might not be for a long term.

"If its crude refinery project is delaying, GOCL is likely to partner with MRPL. Both the companies have tie-up in retail business," the sources added.

The company is planning a base oil refinery of three lakh tonne per annum capacity and special distribution points. Once the project is finalised, it will take 18-24 months to complete. GOCL has not decided location of the project, but the sources said that it would be close to Mangalore refinery.

GOCL is looking at some inorganic operations mainly in lubes and speciality chemicals divisions. In the specialty chemical division, the company is evaluating acquisition of a formulation unit. GOCL is diversified into automotive accessories segment and recently expanded operations to China.

The company has approved the acquisition of 51 per cent of Gulf Oil Yantai. This division is eyeing share of the lubricating oil market in India and the neighbouring countries.

Do you want to discuss stock tips? Do you know a hot one? Join the Stock Market Investments Discussion Group