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HPCL-What's in store?
Mar 11, 2008

In this article, we shall take a look at the refining segment of HPCL. Volumes (Thruput)
HPCL has refineries at Mumbai and Vishakapatnam. During FY07, it was able to process 16.7 million metric tonnes (MMT) of crude, representing 128% capacity utilization. The increase from 13.8 MMT in FY06 was due to low cost de-bottlenecking, completion of a major maintenance programme, initiatives taken towards improving unit performance, reduction in instances of downtime and upgradation of equipment.

(Source: Company releases)

The refineries are in the process of upgrading their facilities to produce Euro-III equivalent grade of fuel at a cost of about Rs. 40 bn. After that, capacity is slated to increase from the current 5.5 MMTPA to 7.9 MMPTA at the Mumbai refinery and from the current 7.5 MMTPA to 8.3 MMTPA at the Visakh refinery.

New projects
Projects for Euro-III/IV products
Project cost Rs 40 bn
Commissioning Dec 07 onwards
Lube base oil quality upgradation at Mumbai
Project cost Rs 6.3 bn
Expected completion Mar 09
(Source: Company releases)
Projects under consideration Rs bn
Delayed coker (Visakh) 49
Diesel hydro-treater (Mumbai & Visakh) 32
Propylene recovery unit (Mumbai & Visakh) 4
Mixed Xylene Projects (Mumbai & Visakh) 3
(Source: Company releases)

The company is also working on a joint venture with Mittal Energy Investments for a 9 MMTPA refinery at Bathinda, Punjab. The project cost is estimated at Rs. 17 bn. It is slated to achieve mechanical completion by September 2010. The project will also involve a crude oil pipeline from Mundra, Gujarat to Bathinda over the entire length of which the company will have the right of use.

What to expect?
Given the upgradation and expansion plans, it can be expected that the new focus area for the refineries will be optimum capacity utilisation, improving yield patterns, production of high value products and innovative blend management. The company is also likely to utilise its flexibility to process different types of crude including higher quantities of heavier crudes.

Margins (GRMs)
The gross refining margins have been buoyant over the last few months. However, we estimate a mild reduction in GRMs in the immediate future for Indian refiners on the back of weak trends in global benchmark margins.

(Source: Company releases)

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