IOC ups heavy crude oil capacity

Refiner to spend Rs 12,000 cr for more high-sulphur oil.

To push up its gross refining margins, Indian Oil Corporation (IOC) is planning to invest around Rs 12,000 crore to upgrade its refining facilities to handle high sulphur crude oil.

By 2010, the company will upgrade five of its refineries at Mathura, Panipat, Barauni, Koyali and Haldia, enhancing the heavy crude oil, or high sulphur crude oil, handling capacity to 66.85 million tonnes per annum (mmtpa).

These capacities will be in addition to the 12 mmtpa, scaleable to 15 mmtpa, coming up at Paradip, which will handle 100 per cent heavy crude oil. The Paradip refinery is also expected to come up by 2010. Currently, IOC has a heavy crude oil handling capacity of 14.9 mmtpa, 30 per cent of its total capacity.

The plan is expected to push up the company's refining margins to $10 a barrel. Overall, refining margins had declined to $4.6 a barrel in 2005-06, from $ 6.21 in 2004-05. This year, the gross refining margins stood at $6 a barrel for the quarter ended June 30.

According to a roadmap prepared by IOC, a copy of which is with Business Standard, the company's capacity to handle heavy crude oil will go up from 53 per cent to 82 per cent of its total imports by 2010.

The refinery-wise plan includes setting up a residue upgrade plant at the Koyali refinery near Baroda in Gujarat, which will also enable the plant to absorb the indigenous Gujarat crude oil output "" 2.3 mmtpa from south Gujarat and 3.5 mmtpa from north Gujarat. The proposed investment is pegged at Rs 3,940 crore.

At Barauni, the company is setting up a heavy crude oil maximisation project with a high sulphur processing coker revamp at a cost of Rs 790 crore.

For the Panipat refinery, a crude oil blending plant and a storage facility are being set up at Mundra port for pumping crude oil through the Mundra-Panipat crude oil pipeline at a cost of Rs 1,011 crore. Work on expanding the refining capacity to 15 mmtpa is already on.

This will have an investment of Rs 4,165 crore.

At Haldia, IOC is setting up a hydro cracker unit to improve yield and distillate quality at a cost of Rs 1,876 crore.

At Mathura, IOC is considering enhancing the heavy crude oil processing capacity to 65 per cent from 57 per cent and setting up a diesel quality improvement project. An additional sulphur recovery unit is also expected to come up, along with an upgrade of the bitumen technology.

Once the 100 per cent heavy crude oil refining capacity comes up at Paradip, up to 73 per cent of IOC's refining capacities will be dedicated to heavy crude oil. This will also increase the total high sulphur crude oil throughput to 49 mmtpa, which is 87 per cent of the company's entire imports.

IOC has been expanding its crude oil mix over the last three years. It now sources 58 different varieties of crude oil, compared with 23 three years ago. It plans to add another 15 varieties sourced from Libya, Colombia, Canada, Congo, Gabon, Venezuela, and Guinea.