Comments
India, the world’s fourth largest refiner, will add as much as 56.6 million tonnes per annum (mtpa) of crude oil refining capacity in the next seven years of which 84 per cent will be through brownfield expansion.
At present, the world’s third largest crude oil consumer has a cumulative refining capacity of almost 254 mtpa, or a little over five million barrels per day (mb/d).
According to the Ministry of Petroleum and Natural Gas (MoPNG), India will add nine mtpa of refining capacity through greenfield expansion.
- Also Read: Crude Check: Upside risk looms
Between 2014-2023, India added a total of 38.9 mtpa of refining capacity, of which 39 per cent was greenfield and the remaining 61 per cent was brownfield, while during 2010-14, it added 29.7 mTPA capacity through brownfield expansion.
As per the Centre for High Technology (CHT), a technical wing of MoPNG, the refining capacity of Indian refineries is projected to increase by about 56 mtpa by 2028.
In FY23, Indian refineries processed 5.13 mb/d of crude oil, or 255.2 million tonnes (mt), against 4.85 mb/d or 241.7 mt. In August 2023, the crude pressed stood at 5.28 mb/d or 21.9 mt (provisional), while during April-August in FY24, the crude processed stood at 5.25 mb/d or 109.5 mt.
As of September 2023, India had a total crude oil transportation pipeline of 10,938 km with a capacity of 153.1 mtpa. The refined products transportation pipeline is 22,973 km with a capacity of 149.3 mtpa.
Refining push
The government’s refining push is on account of India’s rising consumption of crude oil as its industrial, construction and manufacturing sectors expand. Besides, after the Russia-Ukraine war, Indian refiners have emerged as one of the key refining destinations.
CareEdge Ratings said that FY23 marked an exceptional period for Indian refiners. They achieved exceptionally high gross refinery margins (GRMs), primarily attributed to disruptions in the demand-supply dynamics resulting from the outbreak of the Russia-Ukraine war in February 2022.
On higher refining in FY23, CareEdge said the overcapacity operation is primarily attributed to robust domestic and export demands for refined products. The availability of relatively cost-effective Russian crude, limited additions to refining capacities worldwide, a substantial post-pandemic surge in refined product demand, and geopolitical disruptions have collectively contributed to Indian refiners consistently achieving significantly higher GRMs than the benchmark Singapore GRMs over the past three years. Consequently, this has led to an improvement in the credit profile of Indian refiners.
CareEdge Ratings Director Hardik Shah said “In Q1FY24, Indian refiners achieved healthy GRMs, ranging from $7 to $12 per barrel, contingent upon the complexity of their respective refineries. As we look ahead to the remainder of FY24, despite an increase in crude prices and potential constraints on the availability of Russian crude, GRMs are anticipated to remain within the range of $9 to $10 per barrel. This expectation arises from the anticipation of declining margins when processing Brent crude, juxtaposed with the anticipation of substantial margin expansion when processing Russian crude.”
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.