Indian Oil Corporation Limited (IOCL), its subsidiary Chennai Petroleum Corporation Limited (CPCL), and other seed equity partners have agreed to form a joint venture (JV) to develop the planned Nagapattinam refinery and petrochemicals project in the Indian state of Tamil Nadu.

The seed equity partners include Axis Bank and ICICI Bank, and SBI CAPS as the financial adviser.

Under the agreement, IOCL and its subsidiary CPCL will jointly own a 50% stake in the joint venture company (JVC). The remaining 50% stake will be owned by financial/strategic investors, who will be identified at a later stage.

Located at the Cauvery basin at Nagapattinam, the new grass root refinery will be equipped to have a capacity of nine million tonnes per annum (Mmtpa).

CPCL was initially operating a small refinery, with a capacity of 0.5Mmtpa in 1993. The refinery was later upgraded to a capacity of 1Mmtpa.

The new grass root refinery is planned to be built at the same location, following the dismantling of the existing 1Mmtpa refinery.

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The new refinery is expected to produce liquefied petroleum gas, BS VI quality gasoline, and diesel and aviation turbine fuel.

The project will comprise a polypropylene unit that will be installed as part of petrochemical integration. It will also have scope for increased petrochemical production in the future.

The partners also plan to install a single point mooring and desalination plant for crude import and refinery water requirements, respectively.

CPCL said the project is scheduled for completion in 45 months by June 2025. As part of project, 606 acres of land adjoining the existing land parcel have been purchased.

In a press statement, CPCL said: “The Rs.315.8bn [$3.86bn] refinery complex will cater to the petroleum products demand of the Southern region of India and provide impetus for economic development of the region.”