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Rediff.com  » Business » IndianOil in pact with Sinopec

IndianOil in pact with Sinopec

By BS Reporter in New Delhi
December 16, 2006 12:16 IST
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Taking Indo-Chinese co-operation in the oil sector a step forward, the country's biggest oil refiner and retailer, Indian Oil Corporation, has signed a memorandum of understanding with integrated Chinese national oil company Sinopec.

The agreement is aimed at enhancing cooperation in the refinery and petrochemicals segment. The two companies will also jointly undertake exploration and production activities in third countries, as per the MoU signed during petroleum minister Murli Deora's China visit.

IOC is also keen to enhance its existing agreement with another Chinese oil company, Sinochem. The present agreement is for co-operation in international trade.

The two companies are looking to expand the agreement to exploration activities and petrochemicals, for which IOC's director (business development) is scheduled to hold further discussions with officials of Sinochem.

Asked if the agreement with Sinopec could later be extended to its refineries in India, an IOC official said that there were no such plans at the moment.

"We have, however, offered many companies participation in the naphtha cracker project at Paradip," the official said.

IOC's top brass, including Chairman Sarthak Behuria, are part of the delegation travelling with Petroleum Minister Murli Deora. "Our officers will now discuss the nitty gritties with the Chinese company," the official added.

Sinopec has been working closely with India's largest upstream company Oil and Natural Gas Corporation.

In August this year the two companies had acquired 25 per cent stake each in Omimex de Colombia, a subsidiary of Omimex Resources, a US-based oil explorer and producer. The two companies are also jointly developing an oil field in Iran.

With this agreement, Sinopec gets a foot into India's growing refining business.

While oil consumption in the country is set to grow at a compounded annual growth rate of 2.9 per cent during the 11th Plan, the country's refining capacity is scheduled to grow to almost 241 million metric tonne per annum (mmtpa) by 2012, from the current capacity of 149 mmtpa. Moreover, another 43.30 mmtpa capacity addition is in the pipeline.

IOC currently has the highest refining capacity in the country with 60.2 mmtpa. Capacity addition of almost 18 mmtpa is planned during the 11th Plan period.

In 2005-06, the country became an exporter of pertroleum products. Refinery thruput at 132.5 mmt was higher than the 111.9 mmt of petroleum products consumed.

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BS Reporter in New Delhi
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