The country’s refinery production, in terms of crude oil processed, stood at 257.2 million tonnes (mt) in 2018-19, 2.09 per cent higher than the production in 2017-18. Refinery output for crude oil increased by 3.1 per cent to reach 257.43 mt during the April-March 2019 quarter. The output of public refineries gained 3.9 per cent to 143.25 mt, while that of private refineries declined 0.2 per cent to 97.27 mt. The refinery output of joint venture (JV) refineries jumped 16.9 per cent to 16.91 mt in April-March 2019.
There are 23 refineries in the country, of which 18 are in the public sector, two in the JV sector and three in the private sector. Among the public refineries, the output of Bharat Petroleum Corporation Limited (BPCL) improved by 8.9 per cent, Indian Oil Corporation Limited (IOCL) by 4.2 per cent, Numaligarh Refineries by 2.1 per cent, Hindustan Petroleum Corporation Limited (HPCL) by 1.6 per cent and Mangalore Refineries by 0.6 per cent, but that of Chennai Petroleum Corporation Limited (CPCL) declined by 1.6 per cent.
Overall capacity utilisation was slightly lower at 103.9 per cent in April-March 2019 compared to 107.7 per cent in April-March 2018. According to the Economic Survey of India for 2018-19, the refinery capacity is projected to be over 400 million tonnes per annum (mtpa) by the year 2030. The Ministry of Petroleum and Natural Gas (MoPNG) has planned to raise the country’s refining capacity from the current 249 mtpa to 259 mtpa by 2020 and further to 439 mtpa by 2030 and 530 mtpa by 2040.
Further, refining companies have also drawn up plans to meet future demand for petroleum products by de-bottlenecking existing assets, expanding existing refineries and developing grass-roots refinery projects. The MoPNG has urged public and private sector oil and gas companies to add at least 200 mt of refining capacity in the next two decades in order to maintain the country’s leadership position as the hub for Asian refining and product export. Reliance Industries Limited, the operator of the Jamnagar refinery complex in Gujarat, aims to expand its overall capacity by 44 per cent to about 2 million barrels per day (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 will expand its total refining capacity to 116.55 mtpa by 2030 from the current 80.7 mtpa at an investment of about Rs 700 billion in the Barauni, Panipat, Koyali and Mathura refinery expansions. BPCL is looking to ramp up capacity to 56 mtpa, from 36.5 mtpa currently by adding 5 mt to its Kochi unit, 9 mt to its Bina refinery and 6 mt to its Numaligarh unit. Meanwhile, IOCL plans to shut down the 1 mtpa Nagapattinam refinery of its subsidiary, CPCL and build a new 9 mt unit in the next five-six years. The National Iranian Oil Company, which holds 15.4 per cent stake in CPCL, is keen to participate in the expansion project irrespective of the economic sanctions imposed by the US against the Persian Gulf nation. The expansion is estimated to cost Rs 357 billion.
HPCL also plans to expand its Mumbai refinery by 2 mtpa and the Visakhapatnam unit by 6.7 mtpa and set up a new 9 mtpa unit at Barmer in Rajasthan. In addition, IOCL, BPCL, HPCL along with Saudi Aramco and the Abu Dhabi National Oil Company are together setting up a new 60 mtpa refinery on the west coast in Maharashtra at an estimated investment of Rs 2,700 billion.
While there has been a focus on moving towards cleaner fuels and electric vehicles, the major share of the energy basket will still remain with fossil fuels in the near future, especially in the transportation sector, where the demand for petrol and diesel will have to be met by the refineries. The overall fuel demand grew by 4-4.5 per cent in 2018-19, driven by consumption of diesel, gasoline and jet fuel in the transportation sector. Also, several refineries are going to upgrade to raise their fuel quality to BS-VI standards from BS-IV from April 2020 in a bid to fight pollution. Hence, there is ample need for expansion of refinery capacity even though the current refining capacity is in surplus, hence giving opportunities to contractors/developers as well as technology and equipment suppliers.