The country’s refining capacity has increased from a modest 62 million tonnes per annum (mtpa) in 1998 to 247.6 mtpa today, comprising 23 refineries – 18 public sector, three private sector, and two joint ventures (JVs). The refining capacity rose 5.8 per cent during 2017-18 to 247.6 mtpa, mainly on the back of capacity expansion at the Jamnagar refinery operated by Reliance Industries Limited (RIL) in Gujarat and the Kochi refinery operated by Bharat Petroleum Corporation Limited (BPCL). The Jamnagar refinery’s capacity expanded by 8 mtpa while Kochi’s capacity increased by 3 mtpa during the year.
According to the report of the Working Group on Enhancing Refining Capacity by 2040, the current refining capacity of 247.6 mtpa is projected to increase to 259 mtpa by 2020 and further to about 439 mtpa by 2030. Refining companies have drawn up plans to meet future demand for petroleum products by debottlenecking existing assets, expanding existing refineries and developing grassroots refinery projects. The Ministry of Petroleum and Natural Gas (MoPNG) has urged the country’s public and private sector oil and gas companies to add at least 200 million tonnes (mt) of refining capacity in the next two decades in order to maintain India’s leadership position as the hub for Asian refining and product export.
Refiners in India, the world’s third biggest oil consumer and importer, have drawn up plans to raise their capacity by 77 per cent to about 8.8 million barrels per day (bpd) by 2030 to meet the country’s rising fuel demand. To this end, Saudi Aramco and the Abu Dhabi National Oil Company (ADNOC) recently signed an MoU to jointly develop and build an integrated refinery and petrochemicals complex at Ratnagiri in Maharashtra. State-owned refiners Indian Oil Corporation Limited (IOCL), Hindustan Petroleum Corporation Limited (HPCL) and BPCL will hold a 50 per cent stake in the Ratnagiri refinery, while Aramco and ADNOC will hold a 25 per cent stake each. The total investment for the project is $44 billion. The development comes as the single largest overseas investment in the Indian refining sector.
RIL, the operator of the world’s biggest refining complex (located in Gujarat), aims to expand its overall capacity by 44 per cent to about 2 million bpd by 2030. The company plans to expand its old refinery that caters mainly to domestic markets in two phases to 1.26 million bpd from the current 660,000 bpd.
IOCL plans to invest Rs 1.43 trillion to expand its refining capacity to 150 mtpa by 2030 from the current 80.7 mtpa and boost petrochemical production. The investment planned by IOCL also includes the upgradation of major units at existing refineries to help produce cleaner BS-VI grade petrol and diesel by April 2020. The MoPNG also decided to advance the roll-out of BS-VI fuel in Delhi from April 2018 instead of April 2020, after taking stock of the alarming pollution situation in Delhi in winters. BS-VI fuel will reduce sulphur emissions by five times from the current BS-IV fuel.
The petrochemicals sector creates scope for many ancillary industries. The government has planned to set up the West Coast Refinery-cum-Petrochemical Complex of 60 mtpa at an estimated investment of Rs 2,700 billion. Further, the government has laid the foundation stone for another grassroots refinery-cum- petrochemical complex in Barmer, Rajasthan, entailing an investment of Rs 430 billion.
India’s current refining capacity of 247.6 mtpa exceeds consumption but with demand growing at a fast pace, it will need to add more refining capacity to meet the rising fuel needs. The overall fuel demand grew at a robust 5.3 per cent to approximately 205 mt in 2017-18, as compared to 195 mt recorded in 2016-17. The growth in 2017-18 has been in line with expectations, buoyed by the strong growth registered in transportation fuels.