Refinery Projects to Turn India into Major Regional Refining Hub

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Researched by Industrial Info Resources (Sugar Land, Texas)--India's second-largest refining company, Bharat Petroleum Corporation Limited (BSE:500547) (BPCL) (Mumbai), may enhance the refining capacities of its upcoming 128,000-barrel-per-day (BBL/d) Bina Refinery (Madhya Pradesh) and the existing 160,000-BBL/d Kochi Refinery (Kerala). Director of Refineries R.K. Singh said that the capacities of the Bina and Kochi refineries could each be expanded to 320,000 BBL/d. There are tentative plans to set up a greenfield refinery in northern India as well. Singh said that about 2,000 acres of land have been acquired in Uttar Pradesh for the proposed project.

The Bina Refinery is scheduled to begin operations in January 2011, after a long delay of 21 months that was due to the late delivery of a 100-megawatt (MW) power plant that is critical for the refinery's operations.

BPCL is implementing Phase II of a capacity expansion and modernization project at its Kochi Refinery. The project will enhance the capacity to about 200,000 BBL/d per year and install facilities to produce auto fuels that comply with Euro-III/IV quality specifications. The $879 million auto-fuels project is nearing completion.

The new units added to the refinery under the current phase would be a vacuum gas-oil hydrotreater unit; a continuous catalytic regenerator reformer unit; a gas turbine for captive power generation; and all the associated utilities and off-site facilities. A 33-kilometer pipeline is being laid from the refinery to the Cochin International Airport for the uninterrupted transportation of aviation turbine fuel. The pipeline project is expected to be completed by March 2011.

A crude oil receiving facility was completed in November 2007 to help the refinery execute its future expansion projects without being limited by lack of infrastructure. The facility includes a single-point mooring system where large crude carriers can berth easily; a sub-sea pipeline; a shore tank farm (STF); all the associated pipelines; and other facilities. The facility offers the refinery greater flexibility in selecting crude oil and higher savings on freight charges.

Kochi Refinery's future plans include an integrated refinery expansion project in a bid to meet the expected demands for petroleum products from 2015 and onward. A capacity expansion of a further 6 million tons per year will enable the refinery to cater to the future demands of India's southern states. The proposed expansion project also would explore the feasibility of building upgradation facilities that would reduce residual fuel generation and enhance distillates. Facilities to meet the future auto fuel norms also have been proposed as part of the integrated expansion project.

Other additions include two more tanks at the STF in addition to the existing four, such that taking out tanks for statutory inspections will not hamper operations. The refinery's production of naphtha will increase when the capacity expansion projects are completed, but the demand for naphtha is slowing down as consumers are turning to the easily available natural gas as an alternative fuel. The company intends to integrate the refinery with a petrochemical plant in order to utilize the excess naphtha and other feedstocks. Kochi Refinery is also planning to set up power generation facilities that will utilize byproducts such as coke or pitch from the residue upgradation facility. This will generate low-cost power in comparison to the fuel oil- or GT-based power currently generated. Any excess power will be exported.

In addition to the Bina Refinery, there are several other refinery projects in India that are scheduled for commissioning by March 31, 2012. Domestic refining capacity is expected to reach 5.1 million BBL/d by that date, from the existing 4.2 million BBL/d. The other refineries are the 190,000-BBL/d Bhatinda Refinery, which is being set up in Punjab by Hindustan Petroleum Corporation Limited (BSE:500104) (HPCL) (Mumbai); the 320,000-BBL/d Paradip Refinery, which is being set up in Orissa by the Indian Oil Corporation Limited (BSE:530965) (IOC) (Mumbai); and the 128,000-BBL/d Cuddalore Refinery, which is being set up in Tamil Nadu by Nagarjuna Oil Corporation (NOC) (Chennai, Tamil Nadu), a subsidiary of Nagarjuna Fertilizers & Chemicals Limited (BSE:500075) (Hyderabad, Andhra Pradesh). The companies are keen to take advantage of the seven-year tax holiday offered by the Indian government if they begin operations by March 31, 2012. Several other existing refineries are implementing capacity expansion projects as well, and taking India close to becoming a major refining hub in the region.

"Though the country imports almost 80% of its crude oil requirements, the surplus refined petroleum products are exported and are the biggest foreign exchange earners," India's Oil Minister Murli Deora said. "During 2009-10, India exported about 51 million metric tons of petroleum products worth about $31 billion."

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