With a second major international oil firm walking out of its $3-billion project, state-run Hindustan Petroleum Corp Ltd will implement the Bhatinda refinery on its own and may go for an initial public offering closer to its completion in 2010.
"(British oil giant) BP has communicated to us that their board did not consider it attractive to invest in refining and marketing in India," HPCL chairman and managing director M B Lal told reporters in New Delhi.
BP is the second company to exit the project, after Saudi Aramco of Saudi Arabia, which walked out of the 9 million tonnes refinery project in 1998.
In its verbal communication to HPCL on March 22, BP said the company board at its meeting in London reviewed global opportunities for investment and concluded that "shareholders returns were better elsewhere."
With major refining capacity additions planned over the already surplus capacities and strict government control over pricing, forcing oil firms to sell fuel at loss, the BP board concluded that the current investment climate in India was not very suitable for investments in refining and marketing.
"BP, however, remains interested in investing in oil and gas exploration and was looking at bidding for blocks offered under NELP-VI," he said.
Stating that HPCL would go ahead with the implementation of the project despite the setback, Lal said HPCL was in "touch" with other multinationals including, Total of France and foreign partners could join the project at a latter date.
After the equity portion of about Rs 5,000 crore (Rs 50 billion) was tied-up, Guru Govind Singh Refineries Ltd, the company implementing the project, would consider an IPO.
The Bhatinda refinery project was conceived as a joint venture project and HPCL would continue to look for partners.
Last October, HPCL and BP had signed a letter of intent to form a 50:50 venture to construct, operate and control the Bhatinda refinery to start with, and later cover the entire refining and marketing sectors.
Though Lal said there was no stand-off between the two companies on any issues, industry sources maintained that there were differences among the two on the approach to fuel retailing.
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