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A look at refining-II
Mar 3, 2008

In the previous article, we profiled the refining process, types of refineries and drivers of refining margin. In this article, we shall take a closer look at the Indian refining scene. Refining in India

The total demand for petroleum products for FY07 (source: PPAC) was 120 mmtpa out of which high-speed diesel accounted for more than one- third.

The total installed refining capacity in India as on 1.4.07 (source: PPAC) was 149 million metric tonnes per annum (mmtpa) out of which Indian oil corporation accounted for nearly one-third.

What to expect?
The downstream segment of the oil industry is a global business because crude oil and petroleum products can be transported at a relatively low cost by sea and by pipeline and the demand for petroleum products exists worldwide. India has a geographical advantage in becoming the hub of refining in the world as it has proximity to crude oil sources and is located on the natural oil trade route. It has among the lowest capital cost per barrel for creating oil refineries and the lowest operating costs in the world.

Indian refineries have already begun exploiting the advantage to their benefit. They exported more than 32 MMT of petroleum products in FY07 and the capacity utilisation of Indian PSU refineries has been more than 100% as compared to world average of 86%. Moreover, India is expected to add a capacity of 112 mmtpa by FY12 and leapfrog from its current 5th place in the world after the US, China, Russia and Japan. Exports are likely to reach 96 MMTPA by FY12.

Refinery MMTPA
RPL, Jamnagar 29
Essar, Vadinar 24
HPCL, Bhatinda 9
IOC, Paradeep 15
BPCL, Bina 6
Nagarjuna oil 6
Others 24
Total 112

This concludes our series on the refining segment for the energy sector.

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