India to breathe new life into oil sector

"The government will support any project, within the legal framework, to boost the country's oil sector," says oil minister.

A worker walks atop oil tanker wagons at an oil terminal near Kolkata, India. The country intends to revive and rapidly increase its domestic crude production and refining capacity. Rupak De ChowdhuriShow more

Energy-hungry India is ready to revive projects including the Nagarjuna Oil Refinery in the south of the country to boost its oil sector, the oil minister Dharmendra Pradhan told a local television channel on Monday.

India, the world's fastest-growing major economy, meets about three-quarters of its oil needs through imports and wants to expand its production and refining capacity to meet soaring demand.

The Nagarjuna refinery, in the state of Tamil Nadu, was in an advanced stage of construction when it suffered severe damage in a December, 2011 cyclone. The firm lacks the financial strength to continue work at the site.

Completion of the facility, with a capacity of 120,000 barrels per day, would help fill a looming shortage in processing capacity but would require a cleanup of the site and extensive renovation work.

“The government will support any project, within the legal framework, to boost the country’s oil sector. The Nagarjuna refinery is also one of these projects,” Mr Pradhan told CNBC’s Hindi-language news channel.

Nagarjuna Oil Refinery earlier said it was in talks with prospective investors, including state-run firms such as Indian Oil Corp, as well as Saudi Arabia, to revive the facility.

In other comments, Mr Pradhan played down reports that the country’s biggest explorer, Oil and Natural Gas Corp, would be forced by the government to bail out Gujarat State Petroleum Corp (GSPC). He said it was a commercial matter and the boards of the firms would take a decision.

GSPC has been rapped by the federal auditor for investing about US$3.5 billion in an offshore block off India’s eastern seaboard without achieving significant success.

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