India, a net exporter of oil products, may not have any surplus capacity in 15 years going by the current rate of consumption and planned expansion, said the chief of refineries at Indian Oil Corporation, the country’s largest refiner.
“We are already not very much surplus. In 15 years, in spite of all planned steps, the country might be in deficit. But that should not worry us as we can import,” Sanjiv Singh, the company’s director for refineries, told ET.
India has a capacity to refine 230 million tonne (mt) a year. Singh said this will rise to 300 mt by 2030 based on expansion of existing facilities. In addition, the government is assessing the feasibility of building a new, giant refinery of 60 mt on the west coast, which can significantly change the demandsupply situation once it is erected.
The net export of petroleum products has declined in the past two years, falling to 32.3 mt last fiscal from 42.6 mt in the previous year. This trend, Singh points out, will magnify in the following years despite plans to augment the refining capacity.
In 2015-16, consumption of petroleum products rose 11% to 183 mt against a production growth of just 4.5%. Of the total output of about 230 mt, a tenth is consumed by refineries internally with the balance made available for domestic consumption and exports.
The demand for energy is expected to stay strong in an economy that is expanding at 7.6%, throwing up opportunities for refiners to expand.
“Nothing is going to drastically change till 2030. Oil and gas consumption is going to grow even till 2040,” Singh said referring to the possible impact of renewable energy and electric cars on the demand for oil and gas. But he also added a note of caution: “If technology radically changes and our consumption reduces, the demand will come down”.
“The crude market is very wide but the products are available only with a few companies,” said Singh, explaining why the country is better placed importing crude rather than refined products and it should aim to have enough refining capacity to meet local demand.
The only disadvantage of adding refinery is the potential of environmental pollution, but “if we can control that, it would be great,” he said.
The government recently set up a committee to prepare a report for enhancing state refinery capacity by 2040. The panel, comprising oil ministry officials and executives of state and private refiners, will assess primary energy mix of the country and demand for petroleum products by 2040 in its report to be submitted in three months.
Indian Oil Corporation plans to add about 20 mt in the next five years to take its capacity to 100 mt. Other state firms, Bharat Petroleum and Hindustan Petroleum, too have major expansion plans. Justin Bailey Womens JerseyShare This