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Oil and Natural Gas Corp, India's largest oil producer, has proposed an investment of Rs 7967 crore (Rs 79.67 billion) in setting up a 7.5 million tonnes refinery at the site of recent oil find in Rajasthan.
ONGC proposes to build the refinery in joint venture with Cairn Energy of UK, the firm, which has discovered 2.5 billion barrels of oil reserves in Barmer district of Rajasthan, and Mangalore Refinery and Petrochemicals Ltd (a ONGC subsidiary).
"Given the physical properties of the crude, the only feasible and cost efficient option is to refine the crude at the well-head that is at the production site," ONGC-Cairn said in a joint proposal to the Ministry of Petroleum and Natural Gas.
The proposal, put forward by ONGC director (finance) R S Sharma and Cairn Energy director (finance) Kevin Hart, states that the Rajasthan fields would start producing oil from end-2007 and till such time the refinery is commissioned, the oil be moved through a pipeline to Mundra Port (in Gujarat) and than shipped to Mangalore for processing by MRPL.
"Once the proposed refinery is commissioned, the same pipeline (Barmer-Mundra) will be used to transport imported crude oil (for processing at the refinery)," it said.
It requested that ONGC and MRPL be nominated by the government as the purchaser of crude from Cairn Energy fields.
State refiner Indian Oil Corp and Hindustan Petroleum Corp have also claimed right over Cairn crude and proposed to set up separate refineries in Rajasthan.