Shell pulls out of BPCL refinery

He said government was yet to finalise the joint venture partner for the project as negotiations were in progress, the minister said. Asked about the equity pattern in the project, Gangwar said "we would like to go in for a 50:50 joint venture with the government retaining a casting vote in the project."

The capacity of the UP refinery project could be further enhanced by another three million tonnes to increase the capacity to ten million tonnes, the minister said.

He said the pipeline used for the six million tonne Bina refinery project of BPCL from Vadinar could be used to feed this project in Uttar Pradesh. The projectis scheduled to be commissioned by the year 2005, Gangwar said and expressed confidence that government would be able to select the joint venture partner soon.

However, Shell officials were unavailable for comments. The government gave its approval for the first stage for the project in May last year, sanctioning an expenditure of Rs 30 crore.

This included a foreign exchange component of Rs 16.5 crore for pre-project activities, to be implemented at the detailed feasibility report (DPR) stage, the petroleum ministry sources said.

As per the schedule, the project’s DPR was expected to be submitted for second stage approval by mid-1998, which is likely to be delayed in the wake of Shell’s plan to pull out from the joint venture, they said.

Government had approved selection of Shell International Petroleum Corporation as the joint venture partner by BPCL and a letter of intent was also received from secretariat of industrial approvals. The multinational company had also received approval from theForeign Investment Promotion Board (FIPB) for their participation and investment in the project.