(EnergyAsia, August 28 2016, Sunday) — Confident that crude prices will remain low for some time, India is pushing ahead to build another giant oil refinery that will boost the nation’s total annual capacity by more than a quarter to 290 million tonnes.


The proposed 60-million-tonne complex in the central western state of Maharashtra is aimed at increasing India’s role as an oil products exporter as well as meet its own rising domestic demand. While matching the size of the world’s largest stand-alone refinery in nearby Gujarat state, the new plant is slated to be leaner and more advanced technolocially to produce high-end fuels and petrochemicals products.

Officials have decided to proceed with the proposed one-trillion-rupee investment after studies showed it would be viable with crude oil prices unlikely to return to the US$100-a-barrel level of 2010 to 2013. (US$1=67 rupees). Combined with the existing oil-petrochemical base in northwestern Gujarat state, it will enhance India’s western corridor as a major refining and supply trading centre serving Pakistan, East Africa, and even as far as the US, Europe and Asia.

Just as important, the Maharashtra refinery will strengthen India’s domestic energy security as well as its geopolitical position against Pakistan and China in vying for the affections of the Middle Eastern oil producing states.

In a statement to Parliament in early August, Petroleum Minister Dharmendra Pradhan confirmed the project will be jointly owned by three of the country’s state energy firms, India Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum. While Pradhan has not announced details, the companies are working on a plan that could include selling a significant shardeholding to a Middle Eastern oil producer.

India raised its refining capacity to more than 230 million tonnes earlier this year with the start-up of a 15-million-tonne plant in Paradip in the northeastern state of Odisha. Despite numerous project delays and cost overruns, India has quadrupled its refining capacity over the past 20 years to become a major oil products supplier. In 1995, its refining capacity of 60-million tonnes was slightly smaller than Singapore’s, which has lost its position as Asia’s swing fuels supplier.

Despite the surge in capacity, India’s oil product exports have not grown over the last four years. It rose from 63.4 million tonnes in fiscal 2012 to a record 67.9 million tonnes in FY2013 before declining to 60.5 million tonnes in the last fiscal year.

To support the increased throughput, India increased its import of crude oil from 184.8 million tonnes in FY2012 to more than 202.8 million tonnes in FY2015.

On balance, the refining business has yet to pay off as India continues to suffer a deficit in its overall oil trade.

Thanks to the collapse in imported crude prices, India’s oil trade deficit has plunged by more than half from US$98 billion in FY2012 to US$46.9 billion last year. But its refiners have also suffered as their earnings from oil product exports have fallen from US$58.8 billion to US$27 billion over the same period.

http://ppac.org.in/content/212_1_ImportExport.aspx

Source: Ministry of Petroleum and Natural Gas

India’s oil trade in US$m

FY                   2015               2014               2013               2012

Imports

– Crude                       63,961           112,744           142,962           144,293

– Products      10,015           12,138           12,466           12,590

Total Import    73,976           124,882           155,427           156,883

 

Exports

– Crude                                 0                     0                      0                     0

– Products      27,058           47,277           60,664           58,848

Total Export    27,058           47,277           60,664           58,848

 

Net Import      46,917          77,605           94,763           98,035

 

 

India’s oil trade in 000 metric tons

FY                   2015               2014               2013               2012

Imports

– Crude                      202,851          189,435           189,238           184,795

– Products       28,302           21,301           16,697           16,354

 

Export             60,536          63,932           67,864           63,408

 

 

India’s oil and gas demand

FY                   2016               2015               2014               2013               2012

Products         186,209          176,972           168,635           160,436           152,937

in 000 metric tons

Natural Gas       473                           446               405                  371                  293

In million standard cubic metres/day

 

Projected

FY                   2017               2018               2019               2020               2021

Products          197,445           209,185           220,747           232,649           244,960

Natural Gas     494                  523                  552                  586                  606