Kochi expansion is part of BPCL's Rs 20,000 crore integrated refinery expansion project, which also includes a Rs 5,000-crore petrochemical project to produce speciality chemicals.
State-run Bharat Petroleum Corporation Limited (BPCL), which expects to finish work on its 15.5-million tonne refinery expansion in Kochi by December and commission it in the fourth quarter, may look at further increasing its capacity to 22 million tonnes (MT).
"With land acquisition becoming one of the biggest hurdles in new projects, we may look at further increasing the Kochi capacity to 22 MT at a later stage as we have enough land there even after the ongoing Rs 16,5000 crore work," BPCL Chairman and Managing Director S Varadarajan told reporters, without offering a timeline or the quantum of investment.
On the soon to be completed Kochi expansion from 9.5 MT to 15.5 MT, Varadarajan, who will be retiring this week, said, "We are on course to finish the work on the last unit by December and commission the Rs 16,500-crore Kochi refinery expansion project in the fourth quarter. Once completed, this will be the largest refinery in the public sector." It can be noted that public opposition to land acquisition is holding back many large projects in almost all the states.
The 10,000-MW Jaitapur nuclear plant in Maharashtra's Konkan coast is stuck due to opposition to land acquisition. Industry is fearing a similar fate for the proposed 1.8 trillion, 60-MT mega refinery on the West Coast.
Varadarajan, who was talking to the media after the AGM in Mumbai, also announced up to Rs 55,000 crore investment in refining capacity over the next four years, while the total investment will be Rs 1 trillion.
While the largest player Indian Oil has a 15-MT refinery at Paradip in Odisha, Reliance' 33 MT plant in Jamnagar, Gujarat is the largest not only in the country but globally.
Similarly, Essar Oil has a 20 MT refinery in Vadinar in Gujarat, making it the second largest.
The third largest state-run oil marketer BPCL, with 23 per cent market share, currently has four refineries -- in Mumbai, Kochi, Bina in Madhya Pradesh in joint venture with Oman Oil Company and Numaligarh in Assam.
As part of expansion of the 50-year-old Kochi refinery, the company will also be setting up a green biofuel refinery to produce ethanol by converting agricultural and municipal waste, he said.
The ongoing Kochi expansion is also part of BPCL's Rs 20,000 crore integrated refinery expansion project, which also includes a Rs 5,000-crore petrochemical project, which will be primarily producing speciality chemicals.
Varadarajan also said the company will soon start work on the petchem project in Kochi, having received all the approvals, and will be able to complete it by 2018.
As much as Rs 4,000 crore of the project, announced in December 2011 as part of the Rs 20,000-crore expansion of the Kochi refinery, is being financed by State Bank of India.
When asked about the technology partner of the project, the chairman said the company is developing it on its own.
It can be noted that the project had suffered a big setback after Korean chemicals major LG Chem walked out of the joint venture in August 2013, citing adverse international environment for large investments.
BPCL and LG Chem had signed an agreement in July 2012 to set up a SAP speciality chemicals plant in Kochi. Following this, BPCL tried in vain to buy outright the critical technology to make speciality propylene derivatives and SAP (super absorbent polymers), as there are only five companies in the world which have this technology.
The petchem facility, adjacent to the Kochi refinery, will produce 250 MT of speciality propylene derivative products, which are fully imported now.
BPCL expects its average GRM (gross refining margin, or the difference between the price of a barrel of crude oil and the price at which a refiner sells the refined products) to jump to $5-6 a barrel post the commissioning from next fiscal, Finance Director P Balasubramanian said.
He added there will be a $1.5-2.0 per barrel addition to GRM from the plant alone.
Balasubramanian also said there was no major cost overruns for the expansion project, except for Rs 150 crore primarily due to currency fluctuations.
Kochi refinery was dedicated to the nation on September 23, 1966 by the then prime minister Indira Gandhi with a capacity of 2.5 MT per annum, which was later expanded to 9.5 MT over a period of time. With the ongoing expansion, it will be the largest PSU refinery.
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