India’s Chennai Petroleum is two years behind schedule on the construction of a 180,000bpd refinery at Nagapattinam in southern Tamil Nadu state, with building now set to be finished in 2027, its head of finance Rohit Kumar Agrawala told Reuters on Monday.

Chennai Petroleum initially planned to complete the refinery by the end of 2025. The capital structure of the project was recently changed, with parent company Indian Oil now owning a 75% stake and Chennai Petroleum the remainder.

Agrawala said that the joint venture is awaiting government approval on the new equity structure, and that 36 months would be needed for the construction of the plant and three months for commissioning.

He added that the project cost had been revised to 364 billion rupees ($4.36bn), with 66% of this being financed through debt. This is up from the 294 billion rupees cost that Chennai Petroleum had previously pegged in a stock exchange filing.

Chennai Petroleum also operates the 210,000bpd Manali refinery at Chennai in southern Tamil Nadu state.

The company plans to shut some units at the Manali refinery for a month-long maintenance period in July–August, according to Agrawala.

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As the world’s third-biggest oil consumer and producer, India is expanding its refining capacity as it is expected to be the largest driver of global oil demand growth between 2023 and 2030, according to the International Energy Agency.

On Tuesday, the ratings agency ICRA said that the lower value of Russian oil imports has led to estimated savings for India of $7.9bn in the 11 months from April 2023 to February 2024, up from $5.1bn in 2022–23. This could widen its net import bill to $101–104bn in 2025, up from $96.1bn in 2024.

Stable supplies of oil are key for India to maintain energy security. Speaking at the 26th World Energy Congress in Rotterdam last week, Parminder Chopra, managing director of Power Finance Corporation, said: “India has a diverse agenda. It is not only concerned about the energy transition – accessibility to energy is a bigger issue.”