Relocation of New Jersey Refinery to India Has Andhra Pradesh State Backing

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Although there appears to be some skepticism among Indian environmentalists and petroleum industry pundits, the plan to relocate the 62-year-old Eagle Point refinery in New Jersey, which was operated by Sunoco Incorporated (NYSE:SUN) (Philadelphia, Pennsylvania) before being shut down in 2009, has the backing of the Andhra Pradesh state government.

In mid-November the state government signed a memorandum of understanding with Amerind Petroleum to rebuild the refinery at Visakhapatnam at a cost of about $2.2 billion. Amerind is in a joint technical collaboration with American Industrial Corporation (AIC) (Indianapolis, Indiana) on the project The memorandum of understanding indicated that the first phase of the project would see the refinery relocated with an annual refining capacity of 7.5 million tons of crude (more than 150,000 barrels per day) and a range of petroleum products would be produced.

Andhra Pradesh will be given a special incentive package under the state's industrial policy, and it will come under the petroleum, chemicals and petrochemicals region (PCPIR) between Visakhapatnam and Kakinada.

In the second phase, capacity will be expanded to 15 million tons (more than 300,000 barrels per day) annually and a petrochemical complex put in place. The first phase will require an investment of $505 million and the second phase will require $1.7 billion. The promoters reported that the U.S. Export-Import bank will make a $375 million loan available for the first phase.

India's Mail Today newspaper reports that the country's former federal energy secretary, E.A.S. Sarma wrote to the federal petroleum secretary, quoting the report of the U.S Environment Protection Agency, which inspected the refinery prior to its being closed down. He said that the refinery was 62 years old and that apparently its technology was somewhat outdated, its pollution threats fairly significant, and its operating costs were so high that it had to close down. On another occasion, Sarma said that the project proposal was "dubious" and that the refinery is "environmentally unacceptable."

The information on the Andhra Pradesh state government's support is confirmed by a number of sources, and this must be set against the opinions of the skeptics. There will undoubtedly much controversy surrounding the project before final closure.

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