State-owned BPCL planning to set up new refinery worth Rs 50,000 crore

Bharat Petroleum Corporation Limited (BPCL) is planning to set up a new 12 million metric tonnes per annum (MMTPA) refinery in the country, according to a report in the Economic Times.

The state-run oil marketing company will invest around Rs 50,000 crore in the project and is currently assessing locations in three states — Andhra Pradesh, Uttar Pradesh, and Gujarat.

The report quoted an official as saying, "The BPCL is planning another refinery either on the east coast or on the west coast as India needs more refineries to meet the increasing fuel demand. Talks are at a preliminary stage."

The official added that the company may also consider Uttar Pradesh to set up the new refinery.

Last month, BPCL Chairman G Krishnakumar announced that the company plans to increase its refining capacity to 45 MMTPA by FY29.

BPCL operates three refineries located in Mumbai, Kochi, and Bina (Madhya Pradesh), with a combined annual refining capacity of around 36 MMTPA.

Rs 1.7 trillion investment in next five years

The BPCL plans to invest around Rs 1.7 trillion over the next five years in its core businesses of oil refining, fuel marketing, petrochemicals, and clean energy. Of this total capital expenditure, Rs 75,000 crore is allocated for refineries and petrochemical projects, Rs 8,000 crore for pipeline projects, and more than Rs 20,000 crore for its marketing business, the report said.

The report quoted an official as saying that BPCL is considering establishing a new refinery since a proposed plan to build a 60 million metric tonnes per annum (MMTPA) integrated refinery and petrochemical complex on the west coast in Maharashtra did not materialise. In 2015, the government proposed the idea of constructing Asia's largest refinery in Ratnagiri, Maharashtra, at a cost of Rs 3 trillion to meet the country's growing demand for fuel and petrochemicals.

In 2017, a joint venture company between Indian Oil Corporation, BPCL, Hindustan Petroleum Corporation and Saudi Aramco — named Ratnagiri Refinery and Petrochemicals (RRPCL) — was formed to execute the project.

Saudi Arabia's national oil company held a 50 per cent stake in RRPCL, while the three Indian national oil companies were equal partners. However, the project did not proceed due to environmental concerns and opposition from several local residents.

At the same time, fuel demand was rising, driven by higher automotive fuel and naphtha sales. In FY24, fuel demand reached a record high of around 233.276 million tonnes, up from 223.021 million tonnes in FY23, the report stated.

Expansion of refining capacity

To meet the growing oil demand, India plans to expand its refining capacity by nearly 80 per cent, from the current 252 MMTPA to about 450 MMTPA by 2030. The country is planning to establish smaller petroleum refineries due to the reduced challenges associated with land acquisition and regulatory clearances.

However, analysts said that despite increasing global fuel demand, new refineries are not being built, and existing ones in Europe and the United States are shutting down.

The report quoted an official as saying, "World over refineries are closing, which may lead to a crisis of finished products. This is where India can step in and become a refining hub for the world. But for that, we need to add more refining capacity. Fuel demand is predicted to be robust in the coming years."