IRPC ’13: Indian refiners look to evolve amid rising global competition

By Ben DuBose
Online Editor

NEW DELHI -- Private Indian refiners could see global export prospects diminishing in view of increased competition, the director of refineries for state-controlled Indian Oil said on Wednesday.

Speaking at the fourth annual International Refining and Petrochemical Conference (IRPC), R.K. Ghosh said India’s market share in Europe could be threatened by Middle Eastern and US producers, while the Asia-Pacific market could see increased exports from Japan and Australia.

“Indian refiners may also face a problem for gasoline exports, in view of rising Middle Eastern capacity and lower gasoline demand in the US,” said Mr. Ghosh, who gave the keynote address.

While Indian Oil is state-controlled and supplies its products primarily for the domestic market, private companies like Reliance and Essar could be threatened, thus impacting the broader Indian marketplace.

On the whole, India will continue to have a refined product surplus, Mr. Ghosh explained. The gap between refining capacity and product demand, which was at 42 million metric tons (MMT) in 2008-09, jumped to 65 MMT in 2011-12 and is forecast to jump to 122 MMT by 2016-17.

But even with the capacity overhang, Indian refiners have been “quite fortunate”, he said, based on a capacity utilization rate of over 100% during the past five years.

This largely reflects growing domestic demand, Mr. Ghosh said. High-speed diesel (HSD) demand is projected to grow at 5.5%/year for the next 10 years, while India’s gasoline demand is likely to jump by 8.4%/year over that same period.

In addition, several strategies can be implemented to boost profitability, Mr. Ghosh explained, even in the face of increased competition.

For example, Indian Oil’s new refineries have been designed to handle 100% high-sulfur crude. The company is also adding delayed coking units for bottom of the barrel upgrades, thus enabling the company to better handle heavy crudes.

Other strategies include crude blending at port locations and the advent of a heated pipeline to transport Rajasthan crudes, he said.

Indian Oil is also in the process of evaluating hydroprocessing technologies, he said.

“There are significant opportunities for margin improvements in the crude mix and distillate yields,” Mr. Ghosh said.

From a broader industry standpoint, Mr. Ghosh concluded by calling for better global cooperation in the sharing of knowledge and advanced technologies, as well as improved utilization of existing assets by stretching their operating limits.

“We see the path forward,” he said. “We’re in a transition phase. We’ve gone through building refineries in India in various regions.

“Now, we need to educate the public to look at profit. The forecast is ripe today. People have started understanding that we need to grow, we need to be more efficient, and we need to better use the molecules we have.”

Stay tuned to for further IRPC coverage, including our running Day 1 blog with news stories, images and videos.

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