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 way that both don?t arrive at the same time and end up paying demurrage charges ? a charge levied for holding a cargo at the port for more than permissible time.
BK Datta, director, refineries, BPCL, could not be contacted. However, a BPCL official said there were a lot of other initiatives being planned so that the refineries worked more as partners than rivals. These include using a common carrier if the same crude was being brought to the refineries.
?Sometimes, the requirement is very less but the size of the vessel available is standard. If we can plan accordingly, a part of the available space could be used by the other company in bringing the crude and, hence, the cost can be shared,? said the official.
Similarly, the export of some materials can be jointly packaged to get a better deal with a bigger cargo size.
Under initiatives of infrastructure sharing, the companies have already connected their fire line network ? a maze of pipelines used during fire emergencies. This will help them source water from the other refinery if there is a lack of water during a fire at one of them.
Also, both companies are currently working on ensuring that the shutdown periods of both units do not clash and a seamless supply of petro products into the market continues if one of the refineries is closed for maintenance.
Among other steps, techniques of maintenance, using of each other?s excess capacity at times, upgradation of other?s products, etc, are also being contemplated.
?While it is difficult to say how much cost benefit on paper it will lead to, in any case, this will help both in clocking better bottomline numbers and increase our productivity,? said Namdeo.
