New Delhi: Elaborating on Prime Minister Narendra Modi's plan to ramp up India's refining capacity to 400 Million Tonnes Per Annum (MTPA) by 2025, Petroleum Secretary Tarun Kapoor has spelt out two important goalposts for Indian refineries — integration of petrochemicals in refineries to meet increasing demand and ramping up of refining capacity for export. Addressing the media at the 4th India Energy Forum CERAWeek, Kapoor said that the nature of refineries is going to change going forward as there will be an increased focus on meeting the demand for petrochemicals.
"As we move on, we need more petrochemicals because that's what we are importing at the moment. Diesel demand is not likely to increase at the same pace as, say, the requirement for petrochemicals. So, therefore, while we will be expanding the refining capacity, but the nature of refineries would change. We may also have to reconfigure the existing refineries so that we are able to match the requirement of the country. But we also want India to come up as a refining hub in this part of the world, which means that we should be able to export to countries in the region," said the Petroleum Secretary.
In line with the plan delineated by the Petroleum Secretary, state-run oil marketing companies Indian Oil Corporation (IOC) and Hindustan Petroleum Corporation Ltd (HPCL) have been planning to ramp up their petrochemical business to maximise profits and shield their margins from the vagaries of the global crude oil market.
Speaking during a session focussed on petrochemicals at the India Energy Forum, Indian Oil Chairman SM Vaidya said, "We have already invested in refineries over the years to meet the fuel demand in the country and we will continue to do so. But as has been during the pandemic, it was a double whammy of sorts for the refining sector, with low capacity utilisation and poor margins. Investments in this sector are known for their long gestation period and huge upfront capital costs. So, as an investment strategy, we are implementing petrochemical integration at some of our existing refineries. For example, our Panipat and Paradip refineries will be achieving petrochemical integration of 15-20 percent. As a long-term strategy, we also intend to enhance our petrochemical integration capacity to about 14-15 percent on a corporate basis by 2030."
Elaborating HPCL's plan for the same, Chairman and Managing Director MK Surana said, "Our strategy has always been to keep our refining capacity slightly shorter than our marketing capacity. And it is going to be the same going forward. But having said that, our margins have been under pressure off late even though demand has picked up and is reaching pre-COVID levels at a rate faster than what many of us had anticipated. All refineries are trying to integrate petrochemicals in the existing refinery setup and we are no exception to that. As a result, HPCL's new refinery which is being set up in Rajasthan has got a substantial 25 percent of petrochemical component. Going forward, our petrochemical composition in the product market will be around 18-20 percent. Further, with the merger of another group company MRPL with HPCL, we have the ambition to be an impactful player in the field of petrochemicals."
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