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Thu 1 Feb 2007 09:52 PM

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Indian firm in $2bn Iran refinery talks

Essar Oil is in talks to build an oil refinery in the south of Iran.

India's Essar Oil is in talks with the National Iranian Oil Refining and Distribution Company (NIORDC) to set up a US $2 billion refinery in the south of Iran.

Iran has undertaken an US $18 billion expansion of its oil refining capacity to meet its rapidly growing domestic fuel requirements. Essar plans to process Iran's heavy crude at the proposed refinery and wants at least a 51% stake in the project.

"We are studying a refinery in Bandar Abbas with Essar of India," said Akhbari Shad, NIORDC's director of international affairs.

The company said the new 300,000 barrel per day (bpd) plant will provide a foothold for Essar in Iran's refining sector. Essar also wants to import liquified natural gas from Iran and establish projects for oil and gas exploration and production. The company is currently in talks to buy a stake in exploration and production blocks to supply gas for its planned steel plant.

Essar launched India's second private-sector refinery late last year and will increase production to 210,000 bpd during the second quarter of 2007. Iran is planning two new refineries in addition to the Essar venture.

"As a group, we keep looking at growth opportunities globally," said Ganesh Pai, of Essar.

"Essar Oil has already commissioned over 900 retail outlets and expects to have 1,500 outlets fully operational by the end of March 2007," added Pai.

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