Indian Refining Sector

Presented ByArunav barooah-R590210005 Harshit Mehrotra-R590210010 Kumar Siddhartha-R590210011 Varun Kr.Dwivedi-R590210023

Indian current refinery scenario Development of refinery sector Refinery capacity growth in India Challenges in refinery scenario in India. Future prospects in India. What need to be done for expansion.

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the last 50 years ; The country witnessed remarkable growth in Refining facilities Refineries growing from 1 to 20 in number ; processing capacity increasing from 0.25 MMTPA at the time of independence to 178 MMTPA in Yr. 2010. At present there are 20 refineries operating in the country (17 in public sector and 3 in Pvt. Sector)

India : Product Demand & Refining Capacity

India will continue to be product surplus Import/Export requirement for crude/products to be quite substantial

Surplus refining capacity is expected to increase further by 2030

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 At

the time of Independence, India had only 1 very small capacity refinery at Digboi. Cap. 0.25 MMTPA. First decade of Independence (1947-57) saw the establishment of 3 Coastal Refineries by Multinational oil companies operating in India at that time i.e Burmah Shell, Stanvac and Caltex. Burmah Shell and Stanvac set up their refineries in Bombay while Caltex did so at Vizag. Total Refining capacity in India raised to 4.8 MMTPA
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Second decade (195767) witnessed the commissioning of 3 fully owned public sector oil Refineries at Barauni, Guwahati & Koyali. These 3 inland Refineries were set-up with cooperation from Romania & Russia essentially to process the indigenous crude Guwahati & Barauni for Assam crude and Koyali (Vadodara) for Gujarat crude.
Total Refining capacity = 12.7 MMTPA

Second decade (195767) witnessed the commissioning of 3 fully owned public sector oil Refineries at Barauni, Guwahati & Koyali. These 3 inland Refineries were set-up with co-operation from Romania & Russia essentially to process the indigenous crude Guwahati & Barauni for Assam crude and Koyali (Vadodara) for Gujarat crude.
Total Refining capacity = 12.7 MMTPA

Next 10 yrs. (1967-77) witnessed establishment of 2 Refineries one at Chennai with participation of American & Iranian companies and other in public sector at Haldia IOC with assistance from Romania and France. Total Refining Capacity = 22.9 MMTPA
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Period (1977-97) saw the cominiononing of 2 more Refineries in Public sector : one at Bangangaion; which was the first Refinery-cum-Petrochemical unit in India, and the other Refinery at Mathura was setup in 1982 with the assistance of Soviets. Major expansions of the Coastal Refineries at Mumbai, Cochin, Madras and Vizag was also completed in the period. Total Refining capacity = 47 MMTPA

the 8th plan period ; domestic Refining capacity has been raised to about 62 MMTPA. The highest priority has been accorded to low cost expansion of the refining capacity and a new Refinery at Mangalore (3MMTPA) has been commissioned. The period 1997-2002 saw commissioning of 2 more Refineries in Public sector (Panipat and NRL) and one in Pvt. Sector (at Jamnagar of RIL) taking the total Refining capacity in the country to about 115 MMTPA
During

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India : Refining Capacity Growth

As on April 1, 2010, India has a total refining capacity of 184.29 MMTPA including the newly commissioned refinery at Jamnagar) and expected to increase by 240 MMTPA in next one year. Current export is around 51 million ton. 18 out of the total 20 refineries in India belong to PSUs (with a capacity of a little over 59%) In the last few years, the Indian refinery sector has witnessed continuous MMTPA capacity additions and the trend will continue in near future also; Projected capacity by 2017 is 302 MMTPA

* XIth Plan Projection

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India : Refining Capacity Growth

Expansion Plans in India Total Capacity , MMTPA Refinery IOC HPC BPC MRPL RPL Essar Nagarjuna X plan (2007) 60.2 13 22.8 9.69 33 10.5 XI plan (2012) 81.4 32.9 30.8 15 62 14 6 XII plan (2017) 94.7 32.9 30.8 45 62 32 6

Total

148.9

240.9

302.2

As surplus products increases Coastal refineries will be forced to export more

Source : MoP&NG
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Oil Demand & Availability

Widening gap between product demand and crude production from indigenous sources; Heavy dependence on Imports

Bridging the gap - Oil Equity abroad and fresh finds under New Exploration &
Licensing Policy Need for huge investments in refining, pipelines & Marketing infrastructure

Source: XIth Plan Document

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Present approach of Indian Refiners

Indian refiners are adding complex units like HCU, DCU, High Severity FCC , Alkylation, Isomerization units in order to increase value addition and product grades All new projects typically have Nelson Complexity index ranging from 10-14 The switch to cleaner fuels due to newer fuel specifications led to addition of huge hydrotreating capacities Many refiners are adding units to meet BS III/BS IV grade auto fuels from April 2010. The Auto Fuel Policy is driving investment in clean fuel technology. Current export of higher sulfur HSD to ME/SEA may undergo corresponding shift to low sulfur exports

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Indias Refining Expansion Options

Bottoms upgrade DCU with hydrotreating facilities HCU once through with high severity FCC(petrochemical) Other products

Naphtha to petrochemicals
Kerosene fractions to LAB Product quality upgrade Euro III & Euro IV Coastal refineries to match variety of specs abroad

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India as a Global Refining Hub

Asian Export Markets for India

Oil Refining is considered to be a strategic industry by most Asian nations Largest growth is in China and India. Both likely to be self-sufficient. Any potential gap is therefore temporary Best export opportunities with structural supply shortage Vietnam new builds may lag demand Indonesia funding limited for new domestic refineries OtherSri Lanka, Bangladesh, Philippines, Pakistan.

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India as a Global Refining Hub Contd...

India Cost Competitiveness for Asia Local supply is generally most competitive Low energy & tax, freight economics make ME most competitive exporter. India Capex and opex competitive offset by tax and transport diseconomies Export potential to 6-8 countries Indonesia, China, Vietnam, Malaysia,

Bangladesh, SriLanka, Philippines

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India as a Strategic location

Located in the major maritime route from Middle East to Far East Western and south-western coast - as transit landfall for middle-east crude Established refineries on western coast Geographical advantage to serve western and eastern markets Strong domestic demand provides an effective edge against fluctuations in exports

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Challenges : Refinery Operation

All Crudes can not be processed in all refinery Process units configuration different Physical properties Viscosity Very low / high products yield

Flooding / dry up / heat integration

High

metal content ( Ni, V)

Catalyst de-activation

All crudes can not make all products Asphaltenes for Bitumen ATF from BH Crude All products can not be exported Infrastructure requirement All products can not be imported Infrastructure requirement

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 Future Refinery options

The challenges for the future are :

Crude oil is becoming heavier and higher in sulphur and metal content.

Reduced growth in fuel oil demand.

. Stringent environmental regulations for cleaner products/ processes and demand for quality product.

Petroleum Ref./Upes/GCT/July-05/ Mod-15/17

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India is located in the major maritime route from Middle East to Far East. So, the western and south western coast of India can be used as transit landfall for Middle East crude.
Ideal location for creating a hub or clusters of refineries and developing associated infrastructure

Cost

competitiveness driven by lower manufacturing wages

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 Low

capital and cash operating costs compared to developed countries to large, technically skilled manufacturing base and workforce Indigenous procurement

Access

The

SEZ act 2006 is a bold initiative from government of India and this has opened opportunities for potential players to invest in refinery capacity addition and other assets

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Invest more on port facilities, Shore tank farms and pipeline assets for handling liquid cargoes. Incentivizes private & public-private participation in asset creation.

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Build

in capabilities to produce outputs in line with the stringent fuel norms evolving in high demand markets. Upgrade and modernize the refineries to meet the fuel quality During the 8th plan period ; domestic Refining capacity has been raised to about 62 MMTPA. The highest priority has been accorded to low cost expansion of the refining capacity and a new Refinery at Mangalore (3MMTPA) has been commissioned.

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Encourage

large scale private/foreign participation in the refining sector.

Incentivize

existing refineries to tap export markets.

Government should welcome the FDI in refinery sector in India.

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Thank You

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