Hindustan Petroleum (HPCL) and Bharat Petroleum (BPCL) plan to share infrastructure and processes at their respective Mumbai refineries. According to company officials, the two PSUs have joined hands to give a boost to profitability and efficiency at their ageing Mumbai refineries.
“The idea is to look at the refineries as being run by a single owner. That is when some synergies can be worked out,” said B K Namdeo, director, refineries, HPCL. Namdeo said some amount of cooperation was there earlier as well, but it was only in the last one year that the two current directors have accelerated it.
He said the problems faced by both companies were similar — ageing machinery, lower GRMs, space constraints and an urgent need to modernise. The two companies have a similar nature of operations and proximity of location. Therefore, it made sense to “treat them jointly rather than operate in isolation”.
HPCL and BPCL run 6.5-mmtpa and 12-mmtpa refineries, respectively — separated by merely a km in Chembur, Mumbai. As the refineries are over three decades old, their GRMs are the lowest among all their refineries.
For fiscal 2012-13, while HPCL’s Mumbai refinery posted a GRM of $2.08 per barrel, BPCL’s refinery clocked in $4.67 per barrel. This was against an average of $8-9 per barrel posted by the new refineries of BPCL in Bina, Madhya Pradesh, and HPCL’s Bhatinda refinery in Punjab.
A major initiative was to bring in a third-party process optimisation company, Aspen Tech — a US-based firm that builds software for optimising process manufacturing — which will work on developing models for both companies to enable them to tie-up at the manufacturing level.
“They will be treating the two units as one and, based on that, work out objectives such as sharing of streams (processing units for various grades of fuel) or bring in common crude and using each other’s raw materials,” said an HPCL official.
However, Namdeo said this particular initiative was at a very nascent stage.
Among other steps being considered, one is that since both the companies share a common jetty at the port, they can time their cargo in a