The Hindu Business Line : Numaligarh Refinery betting big on product pipeline

NUMALIGARH Refinery Ltd (NRL) is taking measures to enhance its profitability and market reach latest by March 2007, despite facing shortage in crude supply.

The company expects to post a rise in its gross refining margin (GRM), following the completion of Rs 290-crore project for producing 1.67-lakh-tonne Euro-III motor spirit production facility in 2006, replacing naphtha as feedstock in the hydrogen plant with natural gas in March 2007, and commissioning of the 660-km Numaligarh-Siliguri product pipeline in 2007.

While banking heavily on Oil India Ltd , which is set to be a 26 per cent stakeholder soon for providing backward integration, NRL is working out a product sharing arrangement with Hindustan Petroleum Corporation Ltd to expand its retail network across the country.

Currently, the company's sole customer is its parent - Bharat Petroleum Corporation Ltd.

The latter sources most of its Euro-III diesel requirement in Kolkata from Numaligarh.

The arrangement, however, is proving costly because of dependence on time-consuming rail and road transport facilities in the Northeast.

"We currently face problem in evacuation, impacting the production schedule of the refinery.

"Once the product pipeline is in place, we will not only make savings on transportation, but also improve production," a company official said.

The pipeline is being commissioned by OIL with a guaranteed supply of 1.7 million tonnes by NRL.

To hike motor spirit production: Numaligarh Refinery is set to enhance its Euro-III motor spirit production from 5,000 tonnes to 1,67,000 tonnes by next year following the commissioning of the Rs 290-crore naphtha-motor spirit conversion plant.

"This facility will help us produce more of value-added products and enhance out GRM," he said.

The GRM will receive a further boost once the Dhuliajan-Numaligarh two million standard cubic metre natural gas pipeline is in place in March 2007.

NRL will use one mscmd of natural gas to replace naphtha as feedstock in its hydrogen plant and 37 MW captive power unit.

The remaining one-mscmd gas will be supplied to the proposed joint venture, which will supply compressed natural gas in Guwahati and other cities in Assam.