In a bid to enter India's booming petroleum sector, the Hinduja group has entered into a joint venture agreement with Oil and Natural Gas Corporation to partner in developing the proposed Mangalore petrochemical and petroleum special investment region.
The JV will also encompass upstream exploration activities, Ashok Hinduja chairman of the group's Indian companies said. This will be the group's first major investment in the Indian oil and gas sector.
Speaking to Business Standard, Hinduja said, "We have a joint venture agreement with ONGC to develop both upstream and downstream activities. Part of the agreement is the development of the Mangalore petroleum SEZ."
Hinduja said that the largely-privately held group may consider investing up to $4 billion in the Mangalore project. The Mangalore SEZ has been evaluated at $8 billion.
The two companies are also planning to rope in the Qatar Gas Company to supply liquefied natural gas for the project. A team from both companies had visited Qatar last week and made presentations to the Qatari authorities for the supply of 5 million tonne of LNG for the Mangalore petroleum SEZ.
"The exact contours of the financial arrangements will become clear once we know how much the Qataris will invest," Hinduja said.
Qatar, which holds the largest gas reserves in the world has already signed up to supply 7.5 million tonne of LNG to India for Dabhol and other power projects, including NTPC's Kawas project. The Qataris have also expressed an interest is taking a stake in the Dabhol LNG terminal should the government decide to sell a stake in the terminal.
ONGC's subsidiary Mangalore Refinery and Petrochemical Limited is expected to be the anchor developer in the Mangalore SEZ. ONGC has already announced that the capacity of the MRPL refinery is being ramped up from the current 7.5 million tonne to 12 million tonne.
Hinduja group company Gulf Oil already has a tie-up with MRPL for marketing lubricants.Hinduja also said that the group has also tied up with the Geneva-based Amas Bank to set up a half billion dollar fund for its India projects, including the Mangalore project. The bank is owned by the group.