Will elec­tric mo­bil­ity scup­per In­dia’s mega plans for oil re­fin­ery ex­pan­sion?

Re­fin­ing ca­pac­ity de­mand pro­jec­tions to be re­viewed in 2020

The Hindu Business Line - - TAKE 500 - P MANOJ

An am­bi­tious pro­jec­tion by a gov­ern­ment panel on elec­tric ve­hi­cles over the next decade has cre­ated jit­ters among the oil re­fin­ing in­dus­try which has lined up bil­lions of dol­lars to ramp up ca­pac­ity in the world’s fastest grow­ing ma­jor econ­omy.

From a pal­try 0.02 per cent share in the trans­port sec­tor in FY15, elec­tric ve­hi­cles are pro­jected to reach a share of 25 per cent by 2025 and 40 per cent by 2030, a work­ing group man­dated by the Min­istry of Pe­tro­leum and Nat­u­ral Gas has con­cluded in a 2018 re­port after eval­u­at­ing var­i­ous sce­nar­ios, ac­cord­ing to Vi­jay Sharma, Di­rec­tor (Re­fin­ery) in the Min­istry.

Sav­ing fuel costs

Based on cur­rent trends, the work­ing group wrote that In­dia will re­quire 472 mil­lion tonnes (mt) of pe­tro­leum prod­ucts by 2040. A tran­si­tion to a mix of elec­tric ve­hi­cles and re­new­ables will cut the re­quire­ment to 387 mt. But, if a trans­for­ma­tion oc­curs through large scale de­ploy­ment of elec­tric ve­hi­cles and re­new­ables, the re­quire­ment will dip dras­ti­cally to 266 mt, Sharma said at the ‘Re­fin­ing & Petro­chem­i­cals Tech­nol­ogy Meet’ on Satur­day.

Sharma said that elec­tric ve­hi­cles will save more than 30 per cent on fuel costs and help re­duce In­dia’s oil im­ports. Elec­tric ve­hi­cles play a key role in achiev­ing cli­mate change goals and sus­tain­able de­vel­op­ment in the trans­port sec­tor, he stated.

Ca­pac­ity, in­fra­struc­ture

This is ex­pected to have a bear­ing on In­dia’s re­fin­ing ca­pac­ity ex­pan­sion plans.

Based on cur­rent trends, the work­ing group has pro­jected that In­dia needs a re­fin­ing ca­pac­ity of 438 mt by 2030, up from 249 mt that in­cludes the planned mega West Coast re­fin­ery at Rat­na­giri where Saudi Aramco and ADNOC have agreed to in­vest along with IOCL, HPCL and BPCL.

In­dia, ac­cord­ing to the work­ing group, will need an In­dia will need an an­nual re­fin­ing ca­pac­ity of slightly more than 530 mt by 2040 to meet only do­mes­tic de­mand

an­nual re­fin­ing ca­pac­ity of slightly more than 530 mt by 2040 to meet only do­mes­tic de­mand, Pe­tro­leum Sec­re­tary MM Kutty said.

If a 25 per cent ex­port sur­plus is to be cre­ated, then the re­fin­ing ca­pac­ity need to be about 670 mt, Kutty added.

De­mand pro­jec­tions

Based on these as­sump­tions and sce­nar­ios, the ‘com­mit­tee on firm­ing up re­quire­ment of re­fin­ing ca­pac­ity and re­lated in­fra­struc­ture due to emerg­ing tech­no­log­i­cal devel­op­ments, in­no­va­tive busi­ness models and cli­mate con­cerns’, have con­cluded that the de­mand pro­jec­tions may be re­viewed in 2020.

“We have to take a call by

2020 whether the planned re­fin­ery ex­pan­sions would be re­quired or not,” Sharma said.

“Kindly ask the per­son who made the pre­sen­ta­tion. Our ex­pan­sion plans are all de­clared plans. I can’t be com­ment­ing on some­body else’s pre­sen­ta­tion,” said San­jiv Singh, Chair­man of In­dian Oil Cor­po­ra­tion Ltd (IOCL), In­dia’s big­gest State-run oil re­finer.

“Elec­tric mo­bil­ity cer­tainly is one way of re­duc­ing In­dia’s hy­dro-car­bon im­ports. (But) over pro­jec­tions on elec­tric ve­hi­cles may im­pact and sub­due in­vest­ment in the re­fin­ing sec­tor and that is a risk we can ill af­ford,” says Anil Kakod­kar, Chair­man, Sci­en­tific Ad­vi­sory Com­mit­tee, Min­istry of Pe­tro­leum and Nat­u­ral Gas. B Ashok, Chief Ex­ec­u­tive Of­fi­cer, Rat­na­giri Re­fin­ery and Petro­chem­i­cals Ltd, said that “the choice was be­tween a short­age and hav­ing a prob­lem of avail­abil­ity of en­ergy to visu­al­is­ing cer­tain amount of risks which could hap­pen be­cause the world is go­ing to change.”

“No­body has a clear an­swer. Do you think elec­tric ve­hi­cles are re­ally go­ing to re­place overnight,” he asked on Satur­day.

Ashok, a for­mer Chair­man of IOCL, said that the Min­istry work­ing group’s pro­jec­tions should be looked at from the con­text of in­cre­men­tal de­mand for pas­sen­ger cars. But this could pose a prob­lem due to lack of clar­ity on the num­ber and type of new ve­hi­cles man­u­fac­tured an­nu­ally by 2025 or 2030.

“While we are fo­cussing on mov­ing to­wards cleaner fu­els, ma­jor share of en­ergy bas­ket will still re­main with fos­sil fu­els in the near fu­ture, es­pe­cially in the trans­porta­tion sec­tor, where the de­mand for petrol and diesel will have to be met by our re­finer­ies,” Pe­tro­leum Sec­re­tary Kutty added.

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