Petcoke gasification will help Reliance Industries lower the Jamnagar refinery's energy costs and boost its gross refining margin
Mumbai: Reliance Industries Ltd (RIL) has approached three state-run oil marketing companies to buy petroleum coke (petcoke) from them to fire its $5 billion petcoke gasifiers, according to three officials aware of the development. RIL operates the world’s biggest refining complex in Jamnagar, Gujarat, where two adjacent plants can process about 1.4 million barrels of oil a day. It has 10 petcoke gasifiers of which four, in the domestic tariff area (DTA), are already in the ramp-up phase, and the remaining six, in the special economic zone refinery, are likely to be commissioned in the fourth quarter of this fiscal.
“RIL has approached us seeking additional petcoke as RIL’s own petcoke generation capacity will not suffice to meet its gasification needs. We are deliberating on the matter," a senior official of one of the oil marketing companies said on condition of anonymity.
“We produce 6.5-7 million tonnes per annum (mtpa) of petcoke and once the gasifiers are running at full capacity, we would be running the entire petcoke for gasification. We also may require more of either coal or petcoke. Once we are running at 100% capacity, we would stop importing LNG," said V. Srikanth, RIL’s joint chief financial officer.
With refineries processing heavier crudes, the production of petcoke at refineries is peaking and gasification of petcoke has become an efficient and environmentally safe way of utilising it.
RIL wants to completely eliminate its petcoke production of 6.5 million tonnes a year, generated from two of its cokers. Petcoke gasification will help it produce 23 mscmd (million standard cu. m a day) of synthesis gas or syngas which will reduce intake of regasified liquefied natural gas (R-LNG) at its refineries. Syngas is a fuel gas mixture of primarily hydrogen, carbon monoxide and, very often, some carbon dioxide.
RIL takes around 8 million standard cubic metres a day (mscmd) of R-LNG for its refineries which it eventually plans to bring down to 2 mscmd.
In an emailed response, Indian Oil Corp. Ltd said, “Reliance Industries has expressed interest in procuring petcoke from Indian Oil but discussions in this direction have not yet been initiated." Indian Oil sells petcoke to customers from industries like cement, lime kiln and steel. The company plans to install the facility of petcoke gasification in one of its refineries, for which a study is in progress, it said.
Petcoke gasification will help RIL lower the refinery’s energy costs and boost its gross refining margin (GRM), which is what a refiner earns by turning a barrel of crude oil into refined products.
“We expect the entire project (with 10 gasifiers) will be fully commissioned by March 2019. In addition, RIL’s flexibility to switch crude sourcing toward heavier crudes should raise its competitiveness versus global peers. Every $1 per barrel change in GRMs affects FY19-21e earnings by 5-6%," said HSBC Research in a report dated 29 July.
However, if the government decides to ban import of petcoke, owing to environmental concerns, RIL can use 15-20% coal instead of petcoke. “RIL will require 25% of its petcoke requirements once gasifiers are fully ramped up. However, the company does not see a ban on imports for gasifiers and cement kilns," said Morgan Stanley Research in its report dated 30 July.
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