Singapore: State-run Bharat Petroleum Corp (BPCL) will process 22% more crude oil in the fiscal year beginning 1 April as it starts commercial production at a new refinery to feed the nation’s growing energy demand.
The company will process 28 million tonnes of crude, or 560,000 barrels a day, next fiscal year compared with 23 million tonnes likely to be used this year, chairman R.K. Singh said on Thursday. Its Bina plant will start commercial output by 15 Feb., he said.
Indian refiners are expanding capacity as economic growth in the Asian nation boosts sales of cars and motorcyles and as rising affluence increases air travel. The new plant will ease BPCL’s need to source products via imports or purchase fuels from other refiners to top up sales through its retail outlets.
Bina’s “commissioning is getting completed by the end of this month. By 15 Feb., commercial production will start,” said Singh, who is visiting Singapore as part of a delegation led by Oil minister Murli Deora.
“The refinery is designed for Saudi crude so during the trial process we have to use Saudi crude.”
BPCL operates the 120,000 bpd refinery in central India with Oman Oil Co. The facility started crude processing in the middle of last year, but subsequently shut down as secondary units, including tanks to store products, were not enough.
BPCL holds a majority stake, while Oman Oil owns 26%.
The last refinery commissioned in India was in December 2008, when Reliance Industries began production at its 580,000 bpd refinery at Jamnagar in western India.
India imports fuel to meet local demand, despite having surplus refining capacity, as private firms prefer to export refined products, saying they do not get compensation from the government to sell fuel at subsidised rates.
Singh was positive on refining margins.
“Right now, the trend is that product prices are also increasing by the same proportion (as crude), therefore refinery margins are getting better,” he said.
The company’s average refining margins for the third and fourth fiscal quarter was at around $5 a barrel, Singh said.
BPCL operates a 240,000-bpd refinery in Mumbai as well as a 150,000-bpd refinery in the southern Indian state of Kerala, run by subsidiary Kochi Refineries Ltd. It also owns a majority stake in a 60,000 bpd refinery in northeast India.