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In a strategic shift, state-owned oil major Indian Oil Corporation (IOC) plans to diversify 14-15% of its increased crude oil production for petrochemical production over the next eight years.
Explaining the rationale for this diversification, IOC Chairman and CEO, Shrikant Madhav Vaidya, said, “India is going to make a rapid shift in the energy transition. We are increasing our crude oil refining capacity by approximately 16 million metric tons per annum (MMTPA) at Barauni in Bihar and by approximately 9 MMTPA at Chennai Petroleum Corporation Ltd (CPCL) in Chennai, thus taking a total expansion of the capacity of these two plants of approximately 25 MMTPA.
Vaidya was speaking on Friday during a two-day webinar titled “Navigating the Tough Road Ahead” hosted by the World Energy Policy Summit.
With these expansions underway, IOC’s total refining capacity is expected to increase to 106 MMTPA by 2023-24, from 81 MMTPA currently.
Currently, plans are underway to increase IOC’s crude oil refining capacity at its Koyali refinery in Gujarat from 13.7 MMTPA to 18 MMTPA, while refining capacity at the Panipat refinery in the Haryana is expected to increase to 25 MMTPA from the existing 15 MMTPA.
As part of its petrochemical diversification plan, IOC is working to set up a monoethylene glycol (MEG) plant at its five-year-old Paradip refinery for an investment of Rs 5,654 crore. The Paradip refinery is currently being upgraded with an overall capital expenditure of Rs 34,555 crore to make it a modern refinery in India. This MEG plant will make IOC a major producer of synthetic textile fibers. It is proposed that the plant uses propylene and ethylene from off-gases to make MEG a key ingredient for the fiber.
Additionally, IOC is also setting up a similar petrochemical plant at its Gujarat refinery for a capital outlay of Rs 5,251 crore for the production of butyl acrylate, a key ingredient in polyester and plastics.
“By 2030, our plan is to have at least 15% of crude oil converted into petrochemicals where the margins are higher than crude oil. All of these new refineries will help reduce carbon emissions in addition to increasing refining capacity and margins,” Vaidya said.
Expansions are also underway at its Guwahati refineries. Old factories are being refurbished for better efficiency and high-value petrochemicals. All these refinery expansions are planned for a capital investment of Rs 1 lakh crore and will start commercial production in two to three years.
In the petrochemical sector, IOC is undertaking a high value-added diversification plan to produce polypropylene and styrene monomer projects at Panipat and the Lube Integration project at the Gujarat refinery.
Petrochemicals contribute only 3% in terms of revenue, but its share in the company’s net profit reaches 17%. Diversifying the petrochemical business will help IOC reduce the risks of its business and bring more economic value to the business in the future.
Vaidya said oil and gas will remain a sustainable source of energy despite the emergence of the transition to renewable energy in connection with climate change.
“At COP26 in Glasgow in November 2021, no less than 140 countries voluntarily pledged to make every effort to reduce carbon emissions by all possible means and to achieve net zero emissions by a set deadline. India has also made engagement with other countries where the role of the IOC becomes crucial,” said Vaidya.
India is the third largest consumer of crude oil in the world, and demand continues to rise with a growing population and rapidly changing consumer behavior. Vaidya added that sustainable and long-term supply of green energy will become a challenge.
To make this energy transition possible, IOC has developed a plan to make India’s business resilient and low-carbon. IOC therefore invests heavily in research and development (R&D) to make the energy supply smooth, sustainable and carbon neutral. The IOC plans to add 3,000 service stations at all possible locations across the country, which will also have the electronic vehicle (EV) charging facility, a refueling facility for gas-powered vehicles organic and solar, etc.
IOC is actively working to have 240 MW of renewable energy generation facilities, including 70 MW from the solar segment and 170 MW from the wind segment.
DILIP KUMAR JAI
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