- Country would become home to world's two biggest refineries
- First phase will require more than 1 trillion rupee investment
India’s state-run refiners plan to build one of the world’s largest oil-processing plants on the country’s west coast, potentially rivaling the facility operated by Mukesh Ambani’s Reliance Industries Ltd.
Indian Oil Corp., the nation’s biggest refiner will build a 60 million-metric-ton-a-year (1.2 million-barrel-a-day) oil refinery in Maharashtra together with Bharat Petroleum Corp., Hindustan Petroleum Corp. and Engineers India Ltd., Oil Minister Dharmendra Pradhan said in a Twitter post Monday. The companies will develop the project in two phases, with the first 800,000 barrel-a-day facility costing more than 1 trillion rupees ($14.7 billion), according to Pradhan.
Prime Minister Narendra Modi is pushing for new investment while energy companies around the world cut spending to protect their balance sheets from oil’s collapse. India will drive global energy demand in the next quarter century, with oil consumption over that period growing faster than any other country, according to the International Energy Agency.
“Such huge capacities require huge investments and individual existing balance sheets can’t take that kind of risk,” said K. Ravichandran, a senior vice president at ICRA Ltd. in New Delhi. State refiners “coming together for such a project makes lots of sense.”
No one answered phone calls outside normal business hours to the refining department heads of Indian Oil, Bharat Petroleum and Hindustan Petroleum, which all report to the oil ministry.
India will account for a quarter of global energy demand growth by 2040, the IEA forecast in November in its annual energy outlook. The country’s oil demand is expected to reach 10 million barrels a day over that period, marking the fastest growth in the world, the Paris-based agency said. India’s consumption will average almost 4 million barrels a day this year, the IEA said last month. The country has 4.3 million barrels a day of refining capacity, according to the oil ministry.
The planned refinery will produce gasoline, diesel, liquefied petroleum gas, jet fuel and supply feed stock for petrochemical plants in Maharashtra, Pradhan said. Reliance Industries’ twin refineries at Jamnagar in neighboring Gujarat state have a combined capacity of 1.24 million barrels a day, making it the world’s biggest refining complex.
“In years to come, India will import products if capacity is not augmented,” said Deepak Mahurkar, leader for the oil and gas team at PricewaterhouseCoopers in India. “Availability of domestic and export markets make room for more capacity.”
Pradhan didn’t provide a time line for the refinery. The project may take six to 10 years for design, land acquisitions and construction, according to Mahurkar.