1. IOC to pip Reliance to become lead refiner

IOC to pip Reliance to become lead refiner

PSU firm starts processing crude oil at 15-mtpa Paradip refinery

By: | New Delhi | Updated: April 27, 2015 8:03 AM
Reliance Industries

Reliance Industries Ltd’s 33 mtpa refinery at Jamnagar in Gujarat has Nelson complexity index of 11.3, while it is 11.8. for Essar Oil’s 20 mtpa refinery in the same state. (Reuters)

State-run Indian Oil (IOC) has started processing crude oil at its new greenfield 15-mtpa refinery at Paradip in Odisha. With full commissioning of the refinery, IOC’s refining capacity would increase by 28% to 69.2 mtpa from 54.2 mtpa now and this would make it the largest refiner in the country, pipping private refiner Reliance Industries (RIL) with 60 mtpa capacity.

The Paradip refinery is also poised to be the most advanced refinery in the country and may boost IOC’s gross refining margins, which dropped to (-) $2.66/barrel during April-December 2014 because of heavy inventory losses.

“Receiving of crude oil in atmospheric and vacuum unit of Paradip refinery has been commenced for the first time since March 12. Commissioning of the refinery is scheduled from March 2015 onwards,” a company official told FE.

India’s refining capacity has more than tripled over the last 15 years — from 69.99 million tonne per annum (mtpa) in April 1999 to 215.066 mtpa on April 2014. The domestic consumption of petroleum products were 158. 2 million tonne during FY14, which has jumped to 164.98 million tonne in FY15.

“The present (refining) capacity is more than the demand of petroleum products. The country has been exporting surplus petroleum products since FY02. During FY14, the country has exported petroleum products to the tune of R3,68,279 crore,” said petroleum minister Dharmendra Pradhan.

The Paradip refinery, with Nelson complexity index of 12.2 (which shows the refinery complexity), will be commissioned in phases. In the phase-I, atmospheric vacuum unit (AVU) and associated off-sites and utilities will be commissioned, the official explained. RIL’s 33 mtpa refinery at Jamnagar in Gujarat has Nelson complexity index of 11.3, while it is 11.8. for Essar Oil’s 20 mtpa refinery in the same state.

The new refinery, built at a cost of R34,500 crore, would boost the firm’s GRMs starting FY17, said A K Sharma, director (finance) of IOC. “In this fiscal, there would be a phase-wise commissioning. This would be the most complex refinery in the country and the GRM may be of double digit if the Singapore refining cracks hovers $15-16/barrel,” Sharma told FE.

Previously, analysts expected the throughput of IOC to increase to about 60 million tonne in FY15 against 54 million tonne in FY14. This was because Paradip refinery was scheduled for commissioning during June-December 2014.

Now, the new refinery may add 5-6 million tonne to the throughput in FY16. In FY15, IOC’s EBITDA (earnings before interest, taxes, depreciation, and amortization) is expected in the range of R15,000-17,000 crore as against R15,792 crore in FY14. This is because though there is an improvement in marketing margins of the company, while the refining margins are under pressure because of rapidly falling crude oil prices and inventories burden during April-December 2014.

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