(EnergyAsia, April 16 2012, Monday) — Trafigura Pte Ltd has announced its entry into the oil refining and storage business with plans to invest up to US$250 million for a minority stake in a refinery and storage facility under construction in India’s east coast Tamil Nadu state.
The Dutch commodities trader said it will pay up to US$130 million for as much as a 24% stake in Nagarjuna Oil Corporation Limited (NOCL)’s refinery and another US$120 million in storage tanks and infrastructure on a 2,500-acre site in the port city of Cuddalore.
The project’s main shareholders include TIDCO, a Tamil Nadu government state enterprise, and Tata Petrodyne, a subsidiary of India’s privately-owned Tata Group. Trafigura Pte Ltd will replace BP as the refinery’s main crude supplier.
Due to start up in the first half of 2012, the six-million-tonnes/year refinery is equipped to fully process heavy, sour crude to produce Euro-IV grade light and middle distillates. It will have the infrastructure to receive and handle Very Large Crude Carriers (VLCCs) through a single point mooring. NOCL said it plans to raise the refinery’s capacity to 15-million-tonnes/year by 2015.
In a statement, Trafigura Pte Ltd, a wholly-owned subsidiary of Trafigura Beheer BV, said:
“Geographically, the facility is well positioned to receive crude oil from Trafigura’s international producer partners. The investment also affords the company the ability to participate in India’s domestic market where rising incomes, higher vehicle sales and rapid urbanisation are driving the country’s position as one of the world’s fastest- growing major economies.”
Jonathan Pegler, Trafigura’s oil director for the Asia Pacific region, said:
“This is an important, long-term venture for Trafigura and is an exciting project for all concerned. It plays directly to the strengths of Nagarjuna as a leading process operator and to Trafigura as a company committed to balancing international supply and demand for oil products.
“India is fast emerging as a leading hub for oil refining, with domestic demand rising and an increasing trend towards cleaner refined products. In this context, the NOCL Refinery agreement represents a significant development for us. It also has the support of the Tamil Nadu state government, which is committed to developing the region’s petrochemical infrastructure. Once fully operational, the refinery will greatly improve the supply of oil products to local retailers.”
K.S. Raju, chairman of the Nagarjuna Group, said:
“This is a significant milestone for NOCL as it seeks to complete construction and commissioning of its oil refinery at Cuddalore.”