The Hindu Business Line : Foster, ABB Lummus in race for CPCL tie-up

Value-addition

Project meant to split heavy furnace oil that collects as refinery residue into more value-added products
Technology licence agreement could be worth up to even 20 per cent of the project's cost
Plant will be able to process up to 2.2 mt of furnace oil and will produce about 5 lakh tonnes of coke and 1.5 mt of petrol and diesel

Chennai May 5 Foster Wheeler and ABB Lummus are in the race for providing `delayed coker' technology for Chennai Petroleum Corporation's Rs 3,500-crore resid-upgradation project — the biggest project ever undertaken by the company.

CPCL is looking for a technology supplier for the project, which is basically meant to split the heavy furnace oil that collects as refinery residue into more value-added products — petrol, diesel and coke.

The value of the contract given to the technology supplier is not yet firmed up, as it would depend upon the scope of the agreement. Sources in the industry say that the technology licence agreement could be worth up to even 20 per cent of the project's cost.

The `delayed coker' technology enables more of the carbon in the oil to thicken and collect as a gummy mass. This coke can either be fired in a boiler to produce power (in which case, one would have to deal with the sulphurous emissions) or used in cement plants.

Because of the good (and remunerative) demand from cement industries, CPCL has shelved the idea of putting up the residue-fired power project.

Today, because cement companies are expanding capacities, there is demand for the coke, which was previously worth next to nothing. This higher value of coke is what has made a resid-upgradation project economically feasible.

The coker plant will be able to process up to 2.2 million tonnes of furnace oil and will produce about 5 lakh tonnes of coke and about 1.5 million tonnes of petrol and diesel. At today's price of about $50 per tonne, it is worth around Rs 100 crore.

Record throughput

CPCL achieved throughput in 2006-07 of 10.4 million tonnes of crude, bettering the previous record of 10.36 mt in the previous year. Production of all the major products — petrol, ATF, HSD, propylene and furnace oil — was the highest for any year.

Both the company's refineries, at Manali and Nagapattinam, saw higher throughput of crude last year. The Manali refinery, which processed 9.78 mt of crude, achieved a capacity utilisation of 103 per cent.

The refinery also processed 67 per cent of high sulphur crude last year. The high sulphur (sour) crude is cheaper than low sulphur (sweet) crude by about $3-5 a barrel.

CPCL's exports also increased last year to 8.27 lakh tonnes of petroleum products from 6.43 lakh tonnes in the previous year.

Higher project activity

In 2006-07, CPCL incurred Rs 240 crore of capital expenditure. The company initiated a number of capital projects such as the expansion of Refinery-III (by 1 mt at a cost of Rs 150 crore), revamp of the catalytic reformer unit and diesel hydro treatment. (The revamp project will produce higher octane (more valuable) petrol and the other project will result in production of Euro IV quality diesel.)

In the current year, the company will spend Rs 700 crore on capital projects. "This means that the project activities must go up three times compared to last year," the CPCL's Managing Director, Mr K.K. Acharya, writes in the company's house journal. "We will have to stretch ourselves further and fix the stiff targets," he says.

The company is also starting the installation of a wind farm at Palghat Pass near Coimbatore, which is expected to be commissioned by this year-end, Mr Acharya says.

The company has earlier said that the wind farm project would cost about Rs 100 crore and would be set up for a capacity of 17 MW.