Indian Oil Corp to reconsider Panipat refinery expansion

Hindustan Petroleum Corporation's upcoming Bathinda refinery in Punjab has forced the country's largest refiner of crude oil, the Indian Oil Corporation (IOC), to reconsider its plans to expand its refinery at Panipat to 21 mtpa.

The Bathinda refinery has a 9 million tonne a year (mtpa) capacity.

A senior IOC official said, "Before the plan to expand the refinery to 21 mtpa is finalised, we have to study the market impact of the Bathinda refinery."

The Panipat refinery, which is being expanded to 15 mtpa from 12 mtpa, caters to the demand for petroleum products from the north-western part of the country. The Bathinda refinery will also cater to the same market.

Possible expansions of IOC's refineries at Koyali in Gujarat and Mathura are also being reconsidered. "The expansion to 21 mtpa is part of our vision over 10 years," IOC Director (refineries) B N Bankapur said.

"The expansion depends on export potential to Pakistan," he added.

Petroleum products from India are on the negative list in Pakistan. "Pakistan's is a growing market and attempts are on to export products to that country," Bankapur said.

Panipat is well placed to feed Pakistan because of its location.

Officials working at the Panipat refinery too feel that the Bathinda refinery may clutter the domestic market. "All new refineries and capacity additions must be export-oriented, as the country is already a net exporter of petroleum products," an official at the Panipat refinery said.

The Parliamentary Consultative Committee on Refineries had last year projected in 2009-10 the demand for petroleum products would be 122 million tonne, while availability would be 186 million tonne.

In 2011-12, the availability would grow by 17.20 per cent to 218 million tonne, while demand would rise 8.19 per cent to 132 million tonne.

"Moreover, the refinery at Bina also needs to be taken into consideration," the official added. BPCL is constructing a 6 mtpa refinery at Bina in Madhya Pradesh.

IOC officials say that with the upcoming refinery at Paradip in Orissa and another at Ennore in Tamil Nadu, the company would now like to focus on acquiring stakes in refineries overseas.

The company with the highest turnover in the country has a current refining capacity of 60.20 mtpa.