Indian Oil, partners sign deal for $40-billion refinery, petchem plan

19:58 PM | June 19, 2017 | Natasha Alperowicz

A VERY BIG DEAL: Signing
ceremony for west coast refinery
and petrochemicals project.

India’s state-owned oil companies—Indian Oil, Bharat Petroleum, and Hindustan Petroleum—have signed an agreement to build one of the world’s largest integrated refinery-petrochemical complexes in Ratnagiri district of Maharashtra State on India’s west coast. The joint venture (JV) agreement for the west coast refinery project was signed in New Delhi by Sanjiv Singh, chairman of Indian Oil; D Rajkumar, managing director of Bharat Petroleum; and MK Surana, chairman of Hindustan Petroleum in the presence of Dharmendra Pradhan, India’s oil minister.

The 60-million metric tons/year (MMt/y) west coast refinery complex will be built at an estimated cost of $40 billion, and is expected to be commissioned by 2022. It will be a greenfield refinery with 50 units and will be self-sufficient in power and utilities requirements.

Designed to produce Euro-VI and above-grade transportation fuels, the refinery will have in-built flexibility for processing a spectrum of light and heavy crude oil grades, utilizing various blending techniques. It will also be able to produce on-demand product mixes of gasoline and diesel streams, as well as other refined products and petrochemical streams with a high level of integration and energy efficiency, the JV partners say.

The preliminary configuration study of the project is being carried out by Engineers India (New Delhi) in association with an international consultant. IHS Markit is carrying out the market study for the chemicals and petrochemical part of the complex. Apart from the main refinery and petrochemical complex, the viability of other associated industries in the vicinity of the project is also being examined.

Indian Oil will be the lead partner with a 50% stake and Hindustan Petroleum and Bharat Petroleum will each have 25%, Indian Oil’s Singh said at the signing ceremony. Also speaking during the ceremony, Pradhan said that Saudi Aramco wants to enter into exclusive talks with India to buy a stake in the planned refinery.

Pradhan added that although India is the world’s third-largest energy consumer after the United States and China, its per capita energy consumption is a quarter of the world average. “Domestic oil demand is likely to climb to 500 million tons by 2040. Against this, our domestic refining capacity currently is 230–235 million tons. We need to plan capacity addition to not just meet this demand but also of export markets,” he said.

The planned petrochemical complex will have aromatics facilities, a naphtha cracker, and polymer plants, Singh said. The refinery will include three crude oil processing units of 20 MMt/y each. The refinery will be able to source crude oil from the Middle East, Africa, and South America.