State-owned oil explorer ONGC has entered into an MoU with Hindustan Petroleum (HPCL) for the sale of mineral turpentine oil (MTO) being produced at the former''s refinery at Tatipaka on east coast of Andhra Pradesh.
MTO, which is also known as spirit, white spirit and turpentine, is widely used in the manufacturing of surface coatings like paints, varnishes, lacquers.
"An MoU has been signed with HPCL for sale of MTO. As per the MoU, the HPCL will be buying MTO as well as naptha from ONGC and ONGC will be buying Lube oil from the HPCL. It is a win-win MoU for both oil PSUs," said A A Khan, Executive Director (Asset Manager), Rajahmundry Asset, ONGC.
The refinery is expected to produce 10,000 tonne per annum of MTO and fetch Rs 16 crore, he said.
The deal assumes significance in the light of declining profits of the refinery owing to drastic fall in the uplift of the naptha as the users have shifted to natural gas after its availability in the local market, Khan said.
In 2010-11, the refinery had produced 67,789 tonnes, against the target of 66,000 tonnes of value-added products.
The refinery produces naptha, superior kerosene oil (SKO), high speed diesel (HSD)/high flash high speed diesel (HFSD).
The Rajahmundry asset has produced 0.304 million tonnes (MT) of oil in 2010-11 against the target of 0.282 MT, 1,384.3 million metric standard cubic metres (MMSCM) of natural gas against the target of 1356 MMSCM.