Home / Companies / Trafigura invests in Nagarjuna refinery

Mumbai: Trafigura Beheer BV, the world’s third largest oil trading firm, will invest 1,250 crore in Nagarjuna Oil Corp. Ltd’s (NOCL) proposed refinery in Tamil Nadu.

Based on the price Trafigura paid for the 24% stake, NOCL is valued at 2,709 crore. The firm is 58.33% owned by Nagarjuna Oil Refinery Ltd (NORL), another group firm that started trading on the stock exchanges on 28 March. NORL’s market value is 378 crore.

“This is a significant milestone for NOCL as it seeks to complete construction and commissioning of its 6 million tonne (per annum) oil refinery at Cuddalore in Tamil Nadu," Nagarjuna Group chairman K.S. Raju said in the statement.

The estimated cost of the refinery and associated infrastructure is pegged at around 10,000 crore by the group.

Commercial operations at the NOCL refinery is expected to start in the first half of 2013, Trafigura mentioned in its statement.

The Tata group, through Tata Sons Ltd and Tata Petrodyne Ltd, are the second largest shareholders in NOCL, with a combined holding of around 31%. German engineering firm ThyssenKrupp Uhde GmbH holds a 4.13% stake in the company.

Jonathan Pegler, director of oil for the Asia-Pacific region, said in Trafigura’s statement that the investment “played directly to the strengths of Nagarjuna as a leading process operator and to Trafigura as a company committed to balancing international supply and demand of oil".

Trafigura’s strategic investment in NOCL was the first of its kind made by it, the statement said.

“Geographically, the facility (at Cuddalore) is well positioned to receive crude oil from Trafigura’s international producer partners," Trafigura said. The investment also provides the firm the ability to participate in India’s domestic market as the country is “one of the fastest-growing major economies", it said.

An oil and gas sector expert with an international consulting firm said Trafigura’s investment was a “one-off case" to suit its business needs and was unlikely to change the scenario as far as international investments in the Indian refining sector was concerned. He declined to be identified.

“Globally, the big energy players are getting out of refining," this analyst said. “Though the refining sector in India is lucrative, not too many global energy firms are keen in investing in a stand-alone refinery since the oil marketing space in India is unattractive."

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