Reuters
Singapore/New Delhi: Iran’s state oil refining firm and the Essar Group are expected to start building a 3,00,000 barrels per day refinery in southern Iran early next year, sources close to the deal said.
The facility, estimated to cost $8-$10 billion (Rs32,000-40,000 crore) and which would be the first foreign-invested downstream project in sanctions-hit Iran, will boost the OPEC member’s stagnant refining sector that is struggling with petrol shortages.
Once finalized, it will be Essar’s first overseas refinery development and will provide a foothold to the family-owned Indian business house in Tehran, where it is also trying to build a steel plant and acquire exploration assets.
The proposed plant at the southern port town of Bandar Abbas, will process heavy crude such as Soroush and Iran Heavy to be allocated by the Iranian authorities.
“We have completed the feasibility study and now we are working on the project financing, and we have targeted starting on the construction phase next year,” a Tehran-based source from the National Iranian Oil Refining and Distribution Company said.
The refinery could take three to four years to build, the source added.
Essar, owned by the Mumbai-based Ruias family, will take a 60% equity stake in the project with Iran taking the rest, said sources.
“The priority of the new refinery will be to meet domestic gasoline and diesel requirements, and we will export the surplus products,” said an India-based source familiar with the deal.
Ravi Ruia, Essar Group’s vice-president responsible for the firm’s overseas venture and his officials are now in Iran to take the issue forward.
“If discussions are finalized, then work can begin early next year,” the Indian source said.
An Essar spokesman declined to comment on Ruia’s visit and the company’s interest in Iran.
Governor Tim Pawlenty.
Minnesota Governor Tim Pawlenty said today that Essar Global has committed to fully comply with all U.S. and international law, including those prohibiting certain investments in Iran, and that he will support continued state assistance for Essar’s proposed steel project on the Iron Range.

A few days after Indian company Essar Steel Holdings Limited acquired Minnesota Steel LLC, the governor of Minnesota announced that he "will strongly oppose any effort to provide state financial assistance to companies or entities that engage in prohibited business practices with Iran."  

Governor Pawlenty recently returned from a trip to India.  He learned that Indian company Essar Global Limited is pursuing a project to build a refinery in southern Iran.

There is no official word yet from Essar Group, but Iran's Petroenergy Information Network says Essar Group is expected to take a 60% stake in the project and that Essar's Ravi Ruia was negotiating for the project in Iran last week.

The northern Minnesota project will be the first facility which includes all steps in steel production from iron mining to a US$1.65 billion steel mill.  The Iranian refinery will have a capacity of 300,000 barrels per day and cost $8-10 billion.