Iran’s state oil refining firm and India’s Essar Group are expected to start building a 300,000 barrels per day (bpd) refinery in southern Iran by early next year, sources close to the deal said.
The project, estimated to cost $8-10 billion (Rs31,680- 39,600 crore), will boost the Opec (Organization of the Petroleum Exporting Countries) member’s stagnant refining sector, which is struggling with petrol shortages.
Fuel tanks at Essar’s refinery at Vadinar in Gujarat
The move will also provide a foothold to the family-owned Indian business house in Tehran, where it is also trying to build a steel plant and acquire exploration assets.
The proposed refinery at Bandar Abbas, a port town in the south of Iran, will process heavy crude varieties such as Soroush and Iran Heavy, which will be allocated by the Iranian authorities.
“We have completed the feasibility study and now we are working on the project financing, and we have targeted starting on the construction phase next year,” a Tehran-based source from the National Iranian Oil Refining and Distribution Co. (NIORDC), who refused to be identified, said.
The NIORDC source added that the refinery could take three to four years to build.
Essar Group, owned by Mumbai-based Ruia family, will take a 60% equity stake in the project, with Iran taking the rest, the NIORDC source said.
“The priority of the new refinery will be to meet domestic petrol and diesel requirements, and we will export the surplus products,” said an India-based source, familiar with deal, who also did not wish to be named.
Ravi Ruia, Essar Group’s vice-president tasked with the firm’s overseas ventures, and his officials are now in Iran to take the issue forward.
“If discussions are finalized, then work can begin early next year,” the Indian source said.
An Essar spokesperson declined to comment on Ruia’s visit and the company’s potential interest in Iran.