The Hindu Business Line : Refining sector emerges as top merchandise exporter

Good performance
Petroleum products exports have been about Rs 38,300 cr in the first five months of the current fiscal.
State-owned oil companies have planned capacity addition of 53 MMTPA by the end of the XI Five Year Plan.

New Delhi , Dec. 12

Stating that the Government is maintaining a close watch on the volatile international oil prices, the Union Minister for Petroleum and Natural Gas, Mr Murli Deora, informed the Parliamentary Consultative Committee attached to his Ministry that a refining capacity addition of about 16.5 million tonne (mt) has taken place in the country during the first eight months of the current fiscal year.

The Petroleum Minister also informed that Indian refining sector has emerged as the top merchandise exporter of the country ahead of gems and jewellery, with petroleum products exports of about Rs 38,300 crore in the first five months of the current fiscal.

The addition in refining capacity has come in from 6 mt capacity expansion at Indian Oil Corporation Ltd's Panipat refinery and 10.5 mt new grassroot refinery commissioned in the private sector by ESSAR Oil at Vadinar. With this, the total petroleum products refinery capacity in the country has reached 148.97 million metric tonne per annum (MMTPA) up from 132.97 MMTPA as on April 1, 2006, the Minister said.

The State-owned oil companies have planned capacity addition of 53 MMTPA by the end of the XI Five Year Plan, which comes to around 50 per cent of their present capacity, he added. The refinery capacity in the country is expected to go up to about 241 MMTPA by adding about 92 MMTPA during XI Plan, the Minister said.

Three major grassroots refineries are at various stages of progress at Bhatinda in Punjab, Paradip in Orissa and Bina in Madhya Pradesh being developed by Hindustan Petroleum Corporation Ltd, Indian Oil Corporation Ltd and Bharat Petroleum Corporation Ltd, respectively, with an addition of 30 MMTPA by the end of 2010-11.

In addition, private sector is also planning new refineries with a capacity of 35 MMTPA. PSU refineries have also taken up modernisation projects.

Further, as a result of the benchmarking exercise of PSU refineries, follow up projects are being implemented to increase their profitability. These projects are likely to be completed in 2010, involving a total investment of over Rs 20,000 crore.

On the emergence of the refining sector as the top merchandise exporter in the first five months, Mr Deora said petroleum products exports were close to Rs 38,300 crore ($8.3 billion) in April-August this year. In 2005-06, due to additional production, the country was able to export petroleum products worth Rs 51,000 crore ($11.5 billion).

Mr Deora emphasised that exports of oil products, not only provides value addition which could be in the range of 17 to 36 per cent depending on prices, but also help reduce the burden of oil prices on the economy.

The Committee was informed that country would maintain surplus refining capacity to take advantage of the export potential. The demand for petroleum products is likely to increase to 116 MMTPA in 2007-08 from about 111.9 MMTPA in 2005-06 and reach 132 MMTPA in 2011-12 against the refining capacity of about 241 MMTPA.

The exports are likely to reach 93 MMTPA in 2011-12 from about 31 MMTPA in 2007-08. A total of about 21.5 MMTPA oil products were exported in 2005-06.

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