Iran will invest about 15 billion rupees to expand a refinery run by Chennai Petroleum Corp. in south India, the company’s managing director said, amid U.S. sanctions on the Persian Gulf nation that have severely hit its oil exports.
The state-run company is boosting capacity at its Nagapattinam facility by nine-fold to process 9 million tons per year and the investment is Naftiran Intertrade Co.’s share of the 275 billion rupees ($4 billion) expansion plan, Managing Director S.N. Pandey said in an interview in Chennai last week. The rest of the investment will be through debt and equity, including fresh capital from its main founder Indian Oil Corp.
“We will achieve the financial closure in 2019,” Pandey said. “We don’t see any issue in debt raising. We have already talked to many bankers.”
While Naftiran’s investment will ease the Chennai Petroleum’s fund raising task, it will ensure Iran maintains its grip in India, where surging fuel demand has turned it into a prized market for global oil producers. For India, Tehran has been a reliable and cheap source of crude extending favorable credit terms, a key driver for New Delhi to convince Washington to grant some exemption from sanctions that restrict trade with the country.