A ‘local’ oil exploration major has acquired more than 80% stakes in an Assam refinery which germinated in an anti-foreigners movement more than 40 years ago.
Oil India Limited (OIL), the country’s second largest public sector hydrocarbon exploration and production corporation, said its acquisition of majority shares of Numaligarh Refinery Limited (NRL) has been a strategic business decision to partially mitigate the effect of volatility of crude price cycle.
On March 25, a consortium of OIL, Engineers India Limited and the Assam government bought the entire 61.5% stake of Bharat Petroleum Corporation Limited in NRL. The exploration major bought 54.16% stakes to raise its shareholding in the refinery to 80.16%.
Formed in 1959, OIL is considered a ‘local’ organisation because of sentiments attached to its base in eastern Assam’s Duliajan. Many in Assam are more passionate about NRL, often referred to as Assam Accord Refinery as its establishment was one of the conditions of the 1985 accord that ended the six-year Assam Agitation for ejecting “illegal immigrants” from the State.
Officials said OIL’s acquisition of NRL has rested resentment in Assam after the Centre had decided to disinvest BPCL two years ago. The All Assam Students’ Union had opposed the decision, insisting that privatising NRL would be an insult to 855 people who laid down their lives during the Assam Agitation.
“The majority acquisition of NRL is one of the defining moments of OIL’s corporate journey as an exploration and production company looking for vertical integration in the oil and gas value chain,” OIL’s Chairman and Managing Director and NRL Chairman Sushil Chandra Mishra told journalists on the evening of April 13.
“NRL now has become part of an integrated energy company and together OIL-NRL can create a tremendous synergy that will help both the entities to consolidate their business plans and achieve sustainable growth and success in all their endeavours,” he added.
OIL has been the primary source of crude oil for NRL, supplying 67% of the refinery’s requirement. OIL has also been supplying to the refinery 1 million metric cubic metres per day out of the 7-8 MMSCMD of natural gas it produces in the northeast.
NRL’s Managing Director S.K. Barua said the refinery has opted for “smart configurations” instead of going for a planned expansion worth ₹₹28,000-crore in order to shift to petrochemical products.
“We are executing a cross-country crude pipeline 1,630 km in length through Odisha, West Bengal, Jharkhand, Bihar and Assam. We have also ventured into production of value-added food-grade wax, food-grade hexane and exploring possibilities for developing other niche chemicals like furfural alcohol and biodegradable plastics,” he said.