In­dia’s re­fin­ing ca­pac­ity ex­pan­sions lags be­hind growth in fuel de­mand

Resource Digest - - CONTENT -

In­dia may ex­port fewer fu­els in the next four years as growth in the de­mand for oil prod­ucts is ris­ing faster than new re­fin­ing ca­pac­ity to pro­duce them is be­ing added, an Es­sar Oil com­pany ex­ec­u­tive said on Mon­day.

“Over the next three to four years, other than a few brown­field (re­fin­ery ex­pan­sions), we re­ally don’t see any ma­jor ex­pan­sions com­ing in,” Es­sar Oil Chief Ex­ec­u­tive Of­fi­cer B Anand told S&P Global Platts APPEC con­fer­ence in Sin­ga­pore.

RE­FINED FU­ELS DE­MAND

In­dia’s ris­ing dis­pos­able in­come has helped boost its de­mand for re­fined fu­els, in­clud­ing gaso­line, jet fuel and liq­uid propane gas (LPG) but its ca­pac­ity to keep up with this de­mand may be strained in the com­ing years.

With only about 3.5 lakh bar­rels per day (bpd) of re­fin­ing ca­pac­ity be­ing added through new green­field projects over the next four years, In­dia’s de­pen­dence on LPG im­ports may rise while lim­it­ing its ex­ports of oil prod­ucts such as gaso­line and diesel, so that it can cope with its do­mes­tic de­mand, Mr. Anand said. Es­sar runs an oil re­fin­ery in Vad­i­nar, Gu­jarat, that can process 4 lakh bpd of crude oil.

“The pos­si­bil­ity is al­ways there but it is still early days,” replied Anand when asked if the com­pany is con­sid­er­ing an ex­pan­sion of its re­fin­ing ca­pac­ity to help meet the in­crease in In­dia’s fuel de­mand.

BUSI­NESS CON­SOL­I­DA­TION

With Es­sar Oil’s re­cent own­er­ship change, Anand pointed out that the com­pany is cur­rently fo­cused on con­sol­i­dat­ing its busi­nesses. In Au­gust, Rus­sian oil ma­jor Ros­neft and its part­ners — global trader Trafigura and Rus­sian fund UCP — pur­chased a 98.26 per cent stake in Es­sar Oil in a deal an­nounced in Oc­to­ber.

In­dia is a net importer of LPG, a fuel used in cook­ing and heat­ing, and a net ex­porter of other prod­ucts such as gaso­line, jet fuel and diesel.

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