Indian Oil eyes $1.5 billion savings with own plant tech

New Delhi/Mumbai: India’s biggest oil refiner has developed refining processes that may help it save at least $1.5 billion in costs as well as challenge global giants in the technology leasing business.

State-run Indian Oil Corp., which controls nearly half of the country’s refineries, has created its own processes using catalysts and hydro-cracking to convert crude oil into fuels such as gasoline, diesel and liquefied petroleum gas, according to the company’s head of R&D. That means it won’t have to license technology anymore from the likes of major manufacturing companies such as Honeywell International Inc.

“We were at the mercy of a few multinational suppliers,” S.S.V. Ramakumar, director of research and development at Indian Oil, known as IOC, said in an interview in Faridabad, 20 miles away from the nation’s capital city. “Now we have become a technology developer and going forward, we will become a technology provider.”

Building refining technologies squares with Prime Minister Narendra Modi’s campaign to turn the country into a global manufacturing hub. It may also allow the refiner to have more control over its plants and enable it to adapt quicker to changes in domestic fuel demand, which is growing at the fastest pace in the world.

IOC can now supply more than 75% of the technology needed for its plants, Ramakumar said. The licensing fees it typically pays out to refining-technology providers is about 5 percent of the project cost, he said. That means savings of about $1.5 billion on the estimated $40 billion mega-refinery it’s planning with some other state processors on the country’s west coast, according to Bloomberg calculations.

Indian Oil has a home-grown fluidized catalytic cracking unit, called IndMax, that can increase LPG output at its newest 300,000 barrels-a-day refinery on the country’s east coast. It also plans to spend Rs2 billion ($31 million) to build a catalyst manufacturing plant in Panipat in northern India.

“Indian refiners spend Rs20 billion every year on catalysts,” Ramakumar said. “We had to pay whatever the manufacturers charged, draining a lot of foreign exchange.”

The refiner is also looking to lease the technologies, making a foray into a field traditionally dominated by firms such as Honeywell as well as Axens and Technip SA. IOC is in talks with five or six overseas refineries for IndMax adoption, as well as several domestic rivals, Ramakumar said. Bloomberg