India is all set to emerge as a major refining hub in the entire South East Asian region.
In one of the biggest investments of over Rs 1.5 lakh crore (close to $22 billion), plans are afoot to build one of the world’s largest refinery— a 60 million tonnes per annum (or 1.2 million barrels per day) refinery in coastal Maharashtra.
This new proposed refinery on India’s west coast will be set up by the public sector oil companies, according to petroleum minister Dharmendra Pradhan. These state-run oil firms would include India’s largest oil refining and marketing company—Indian Oil Corp (IOC) along with Bharat Petroleum Corp., Hindustan Petroleum Corp. and Engineers India Ltd.
The Minister of State (I/C) for Petroleum & Natural Gas Dharmendra Pradhan informed the Lok Sabha in a written reply on April 25 that Oil PSUs — Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL) plan to jointly set up an integrated refinery-cum- petrochemical complex with a refining capacity of 60 MMTPA (million metric tonnes per annum) in 2 phases in Maharashtra.
Engineers India Limited (EIL) is carrying out detailed feasibility study. Oil PSUs and EIL are in the process of site selection for the refinery in consultation with Govt. of Maharashtra.
Oil Companies take decision on equity structure and financing of the project depending on various financial and operational parameters. The other details of the project are finalized after the completion of Detailed Feasibility Study and selection of site. The implementation time for the proposed Refinery is estimated to be seven years after acquisition of land.
- 60 MMT Refinery to cost $22 billion
- Will be set up in two phases
- Investments to be shared by state-run oil firms IOC, HPCL, BPCL and EIL
The refinery would be built in two phases of 40 MMT (800,000 barrel a day facility) and 20 MMT (400,000 barrels a day) respectively. The first phase of 40 MMT will entail an investment of over Rs one lakh crore (close to $15 billion), Pradhan said in his tweet.
“The refinery will produce petrol, diesel, LPG, ATF and feedstock for petrochemical plants in plastic, chemical and textile industries in Maharashtra,” Pradhan said, adding that the government of Maharashtra and the ministry of petroleum and natural gas will work for early identification of land for refinery and finalisation of details for the project.
India, with 23 refineries, is a net exporter of petroleum products and has emerged as a refining hub with the fourth largest refining capacity in the world with 4.5% of world share. Indian refineries have the highest complexity and can refine almost 180 kinds of crude. In 2014-15, India exported 63 Million Metric Tonnes of petroleum products to more than 55 countries around the world.
Presently, India’s private sector –Reliance Industries’ twin refineries at Jamnagar in neighboring Gujarat state have a combined capacity of little over 60 mtpa or 1.24 million barrels a day, making it the world’s biggest refining complex.
Refinery to be built in 2 phases (40+20 MMT);1st phase will have >1 Lakh Crore investment(biggest in India) pic.twitter.com/JY8bl7D3yE
— Dharmendra Pradhan (@dpradhanbjp) January 25, 2016
Experts feel that the move to set up this mega 60 MMT refinery is interesting and comes at a time when world over energy companies are seen cutting their expenses and capex following the sudden collapse of crude oil prices. However, PM Narendra Modi’s government has plans to make India emerge as a major global refining hub and this is one such step in that direction.
According to the International Energy Agency, India will drive global energy demand in the next quarter century, with oil consumption over that period growing faster than any other country.
India will account for a quarter of global energy demand growth by 2040, the IEA forecast in November in its annual energy outlook. According to a bloomsberg report, India’s oil demand is expected to reach 10 million barrels a day over that period, marking the fastest growth in the world, the Paris-based agency said.
India’s consumption will average almost 4 million barrels a day this year, the IEA said last month. The country has 4.3 million barrels a day of refining capacity, according to the oil ministry.