HPCL plans to set up LNG terminal on east coast

Hindustan Petroleum Corporation Ltd (HPCL), country’s third-biggest oil marketer and refiner, is in the final stages of zeroing in on a location for setting up an LNG terminal on the eastern coast.

“We have signed a memorandum of understanding with Shapoorji Pallonji and Co for the terminal and it will come up somewhere on the eastern coast,” said S Roy Choudhary, chairman and managing director, HPCL.

He did not mention the size of the terminal being planned.
Besides diversification into LNG, expansion of refining capacity and setting up a new refinery at Mumbai are the focus areas for the next five years, he said.

The company plans to expand its refining capacity from 14.8 million tonne per annum (mtpa) currently to 42 mtpa by 2016-17 and this is expected to accrue an investment of 132,000 crore, Choudhary said.

The capacity will involve the expansion of its Vizag refinery from 8.3 mtpa to 15 mtpa, setting up a new 9 mtpa refinery at Ratnagiri, starting of its 9 mtpa Bathinda refinery and optimised production from existing 6.5 mtpa refinery in Mumbai. Besides, the company plans to operate the refineries at over 100% capacity utilisations.

K Murali, director, refineries, said the Bathinda refinery will start operations from March 2012. “We can expect gross refining margins of $3-4 per barrel premium to Singapore GRM as the Nelson Complexity of the refinery is 12,” he said.

Developed by Wilbur Nelson in 1960, Nelson complexity indicates whether a refinery can process crude of cheaper quality and produce value added products from them. Higher the number, higher is the complexity. It is an indicator of not only the investment intensity or cost index of the refinery but also the value addition potential of a refinery.

Bathinda refinery’s crude basket for mainly comprises of Arab heavy sour crude and the company plans to further diversify it using Venezuelan and Mexican crude grades too.That could improve GRMs further, he said.