NORL declines offer of partnership on stalled Cuddalore refinery

Nagarjuna Oil Refinery Ltd. (NORL) has ended discussions with Netoil (Singapore) (Pte.) Ltd. for the sale of its interest in subsidiary Nagarjuna Oil Corp. Ltd. (NOCL) in a deal that would have advanced the long-stalled construction of NOCL’s planned 6 million-tonne/year refinery at Cuddalore, Tamil Nadu, about 180 km south of Chennai, India, on the Bay of Bengal.

Content Dam Ogj Online Articles 2016 02 Feb5norlcuddalore1

Nagarjuna Oil Refinery Ltd. (NORL) has ended discussions with Netoil (Singapore) (Pte.) Ltd. for the sale of its interest in subsidiary Nagarjuna Oil Corp. Ltd. (NOCL) in a deal that would have advanced the long-stalled construction of NOCL’s planned 6 million-tonne/year refinery at Cuddalore, Tamil Nadu, about 180 km south of Chennai, India, on the Bay of Bengal (OGJ Online, Dec. 21, 2000).

At its Feb. 4 meeting, NORL’s board unanimously voted not to pursue the sale of its equity capital (46.78%) to Netoil to move the project forward, NORL said in a series of Feb. 4-5 notices to India’s National Stock Exchange.

The company offered no additional details regarding financial aspects of the proposed deal or what prompted the decision to refuse it.

NORL did confirm, however, that remains in discussion with other parties interested in investing in the refinery project.

Content Dam Ogj Online Articles 2016 02 Feb5norlcuddalore1

While multiple investment delays have plagued the project since its inception (OGJ, Dec. 3, 2012, p. 32; Feb. 19, 2001, p. 50; OGJ Online, Apr. 13, 2012; Feb. 23, 2006), construction of the refinery, which began in 2010 (OGJ, Dec. 6, 2010, p. 50), halted completely in 2011 following extensive damage from cyclone Thane (OGJ, Dec. 2, 2013, p. 34).

Since that time, NOCL has sought investment partners to help complete the project amid sharply rising construction costs, NORL has said in annual reports to shareholders.

According to NOCL’s most recent update on the project, the Cuddalore refinery has reached a physical completion rate of 58%.

Contact Robert Brelsford at rbrelsford@ogjonline.com.

More in Refining & Processing