ONGC’s Mangalore SEZ @ whatisindia.com Friday, September 22, 2006 09:59:28 IST

The Oil and Natural Gas Corporation (ONGC) will invest Rs. 35,000 crore (USD 7.6 billion) in the Special Economic Zone at Mangalore to house a Liquefied Natural Gas (LNG) plant, a 15 million ton (mt) refinery, petrochemical plant, and power plant.

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However, the proposed Rs. 8,000 crore (USD 1.7 billion) refinery project to process crude oil pumped out by Cairn Energy in Rajasthan was found to be unviable unless the state Government is prepared to extend large-scale fiscal incentives. This conclusion includes the alternative of building a pipeline to refine the oil at Mangalore.

The ONGC had also found oil and gas in 10 new locations during 2005-06 including 5 in deep-sea areas in the Krishna-Godavari (KG) basin, 3 in shallow offshore areas off Mumbai, Saurashtra, and Krishna-Godavari regions, and 2 on land one each in KG basin and Assam.

Starting 2nd week of November, the company would commence shipping crude oil from its Russian oilfield, Sakhalin-I with the first two cargos of crude oil each with a capacity of about 700,000 barrels and refined at the Mangalore Refinery & Petrochemicals Limited (MRPL). The refinery will use Rs. 8,000 crore (USD 1.7 billion) from its reserves and raise Rs. 5,200 crore (USD 1.13 billion) in debt instruments to finance the expansion of refinery capacity to 15 mt and is expected to be complete in 48 months.

ONGC says that it will use paper profits resulting from decline of international oil prices to wipe out losses it suffered last fiscal year due to lower than market prices subsidization by the Government. It has also submitted a proposal to the Petroleum Ministry to create a more transparent and sustainable oil pricing policy that is linked to international prices and this policy could be applied uniformly to other players such as Oil India Limited and Gas and

He said the company had submitted a proposal to the Petroleum Ministry for a transparent mechanism linking subsidies to international prices. He said the proposal was being considered but the Government had pointed out that it could be applied uniformly to other players in the sector like Oil India Limited and Gas Authority of India Limited (GAIL).

ONGC has major investment and growth plans to make it one of the largest oil companies of the world to facilitate the social and economic goals of India . There is major expectation that India will become a major refinery hub in the world.