July 2017

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Viewpoint: The future of India’s refining capacity and the rise of clean fuels

India is emerging as the world’s new oil demand center, with burgeoning consumption providing huge potential for downstream oil and gas growth. With a GDP ranked in the top 10 globally and a large, growing population, India has seen continuous increases in demand for energy in all forms.

Kanwar, R., Contributing Writer; Nichols, Lee, Hydrocarbon Processing Staff

India is emerging as the world’s new oil demand center, with burgeoning consumption providing huge potential for downstream oil and gas growth. With a GDP ranked in the top 10 globally and a large, growing population, India has seen continuous increases in demand for energy in all forms.

India’s domestic refining capacity sits at approximately 4.6 MMbpd—the country’s refining network capacity has more than tripled over the past two decades. India’s refining capacity is adequate to meet present consumption rates, but due to the projected growth in demand, additional refining capacity is needed. Both public and private refiners are planning, or have already commenced, major refinery expansions, upgrades and grassroots facility construction. By the early 2020s, India is forecast to increase its domestic refining capacity from 4.6 MMbpd to approximately 6.3 MMbpd.

In total, Indian refiners are investing more than $30 B in additional refining projects through the early 2020s. Capital expenditures are expected to be even higher due to new regulations to curb air pollution and produce Euro 6 standard fuels by 1Q 2020. India is skipping the implementation of Bharat Stage 5 (BS-5) and moving directly to BS-6 standards. The BS-6 regulations are being imposed four years ahead of schedule and call for a 68% reduction in nitrogen oxide (NOx) emissions.

After a successful International Refining and Petrochemical Conference in New Delhi, India, earlier this year, Hydrocarbon Processing had the pleasure of speaking with Mr. B. Ashok. Mr. Ashok, who retired as the Chairman of Indian Oil Corp. Ltd. (IOCL) in May, has had a long and distinguished career in the industry. He will be succeeded by Sanjiv Singh, who was IOCL’s Director of Refineries for many years. IOCL is India’s largest commercial enterprise and one of the few Indian corporations in FORTUNE’s Global 500 listing of the world’s largest companies. HP

HP: With the growth in India’s demand for transportation fuels, what is IOCL doing to bridge the nation’s demand and supply gap?

Ashok: As the flagship national oil company in the downstream sector, IOCL owns and operates 11 of the country’s 23 refineries. IOCL has a combined installed capacity of 80.7 MMtpy (1.6 MMbpd). With our rapidly growing economy, we anticipate a robust and rising demand for petroleum products in India in the next 25 yr. We are focused on vastly extending our existing refining capacity through brownfield and greenfield routes.

HP: Will IOCL be ready for the BS-6 deadline in April 2020? Also, what steps is IOCL taking to meet the fuel requirement?

Ashok: We have successfully met the April 1 deadline for BS-4 fuels, and we are now gearing up to leapfrog from BS-4-grade fuels to BS-6-grade fuels in the next 3 yr. This project is one of the most ambitious in the world, and will require a focused and coordinated national effort to meet the stringent timeline of April 2020. Our technical teams are very much on the job. We have already budgeted for this project and are in the process of acquiring the requisite know-how and technology needed for a seamless transition to BS-6 fuels by the April 2020 deadline. Work is underway at all refineries for fuel-quality upgradation within the given timeline.

HP: What major investments are IOCL making to increase the production of transportation fuels and petrochemicals?

Ashok: As I mentioned, we are planning brownfield expansions in most of our existing refineries. Ongoing capacity expansions in operating refineries will raise refining capacity to about 100 MMtpy (2 MMbpd) by 2021–2022. A major brownfield expansion will be the two-phase expansion of our group refinery at Nagapattinam from 1 MMtpy to 9 MMtpy in Phase 1, and then to 15 MMtpy in Phase 2. We are also using our own refining technologies to maximize yields of LPG and gasoline. Our petrochemicals vertical is in an expansion mode, as well. We are now the second-biggest player in the domestic market and are exporting to more than 70 countries.

HP: What is the update on the proposed, 60-MMpty mega-refinery to be built on India’s west coast?

Ashok: India’s Ministry of Petroleum and Natural Gas is keen to leverage the collective strength of the country’s oil and gas sector to meet the fast-growing energy needs of the booming economy. With this philosophy as the guideline, a mega-refinery is on the anvil on the west coast of India. This 60-MMtpy refinery and petrochemicals complex would be a joint project between IOCL and the other two oil marketing companies in the downstream sector, Hindustan Petroleum and Bharat Petroleum. Engineers India Ltd., which is conducting the feasibility study, will also possibly join as a partner. The complex will be built in two phases at an estimated cost of $30 B. A Memorandum of Understanding (MoU) was signed in December 2016, and preparatory discussions are presently being held. Land is being acquired, and some foreign companies are keen to invest in the project.

HP: In your stewardship as Chairman of IOCL, what do you feel have been the company’s major achievements?

Ashok: More than the excellent physical and financial performance of IOCL during my 3-yr tenure, what really gives me a deep sense of satisfaction is the unstinted support and cooperation I received from senior leadership across divisions and functions. We have taken steps that are culminating in IOCL emerging stronger and more future-ready to continue with its superb legacy of serving the country for the past 67 yr. The IOCL that I shall be handing over to my successor is talented, youthful and primed to take on the great challenge of fueling the unprecedented growth of the Indian economy, which is one of the fastest growing economies in the world.

HP: Lastly, we have read that you are an avid musician, and we are curious to know what instrument you play.

Ashok: Well, I am indeed fond of music. It is something I have built into my lifestyle. Listening to music relaxes me and helps me unwind after a busy day. I do not play any instrument, but I do sing. My favorite lyrics are from Hindi films of the 1960s and 1970s. The musicality and lyricism of the classic songs or ghazals of the old days haunt even today’s generation. HP

With more than 35 yr of experience in the oil and gas industry, B. Ashok has served IOCL in various capacities and across multiple disciplines. Beginning his career as a field officer, he steadily rose in the organization. He was a member of a core team that initiated business development activities for diversification of the business and the integration of both the upstream and downstream sectors. He has considerable global experience, and oversaw the company’s overseas businesses in Southeast Asia. He was also on the board of IOCL’s Sri Lanka subsidiary.

During his tenure at IOCL, Mr. Ashok occupied leadership and policy formulation positions for several years and was instrumental in establishing numerous benchmarks. Mr. Ashok also headed the corporate communications department, and initiated several projects in training and development.

As the head of the retail sales division, he managed a 24,000-fuel stations network across the country. He initiated several technological innovations in the retail business, including the launch of the mobile application mPower for field officers, the first for any retail industry in the country; XSparsh, a mobile app for dealers; and Fuel@IOC, a mobile app for customers.

An alumnus of the College of Engineering at Madras University, Mr. Ashok majored in mechanical engineering. Later, he was selected for the prestigious National Management Program and earned his PGDM from MDI-Gurgaon.

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