Paradip refinery, one of the largest and the most modern refineries of the world, can alone offer at least 20-30 per cent bottomline share per annum to the country’s largest refiner--Indian Oil Corporation ltd (IOC)-- if the 15-million tonnes per annum (mtpa) greenfield project in Odisha is fully commissioned by FY18, according to a top official.
“Paradip refinery can alone contribute nearly 20-30 per cent to the company’s profit per annum and would offer one of the best refiining margins if our 15 mtpa green field capacity is fully operationalised in 2- year time ,” said GS Singh, Executive Director (Technical) at the Paradip refinery project of IOC.
The State-owned oil major has a total of 10 other refineries in which Paradip is catering to the maximum crude demand and the proposed project has many hopes in the future for the nation.
“The project got the final investment approval in 2009 and has been scheduled to be formally inaugurated by Prime Minister Narendra Modi on February 7,” Singh added.
As Paradip is considered to be one of the most modern refineries in the country with over having 150 different types of crude oil, the officials here believe that the refinery is expected to run between 60-80 per cent of its installed capacity in FY17 and hopefully, 100 per cent utilisation in FY18.
Singh believes that the refinery is expected to show a gross refinery margin (GRM) of $14-15/barrel, which is the highest among all the IOC refineries at the current prices. “GRM is the difference in dollars per barrel between its product revenue and the cost of raw materials,” he said.
The refinery was originally planned to be completed by April 2012 but it got delayed due to law and order problem. “The refinery had to cost Rs 29,777 crore but the delays have now taken the cost to Rs 34,555 crore,” said the official.
As far as the crude scenario is concerned, Paradip refinery has been built to process at least 40 per cent of dirtiest crudes like Maya of Mexico which are cheaper than the cleaner and easier varieties available from the Middle-East. “The refinery will have a Nelson Complexity Index of 13, the highest in the world,” said the official.
Paradip refinery has also been lending its support to check vehicular pollution in the country. Currently, it is equipped to roll out BS-IV fuel and it has also plan to jump to BS-VI fuel directly from BS-IV complaint petrol and diesel by 2020.
In a bid to upgrade and install some new units for providing BS VI grade automotive fuels, Paradip refinery of the State will also soon have to spend Rs 4,000 crore more for the project. While the company is currently drawing up the plans, the investment is expected to come by 2016 since the units will need to be in place by December 2019. However, Petroleum Minister Dharmendra Pradhan is learnt to have been making many efforts in this regard to see a success in future.
“The refinery has been configured for BS IV and V and the Government decision to move to BS VI would require an investment of about Rs 4,000 in the next four year to upgrade and add some units,” Singh said.
With the full commissioning of Paradip refiner, IOC’s total refining capacity would increase 80.7 million tonnes per annum (mtpa) from 65.7 mtpa now – the highest in the country. The domestic consumption of petroleum products, however, has been marginally increased from 158. 2 million tonnes in FY14 to 164.98 million tonnes in FY15.
With poor performance of refiners because of overcapacity and sluggish demand worldwide, IOC has decided to set up a polypropylene project at Paradip with an estimated cost of Rs 3,150 crore and targeted to be commissioned by September 2017.
“Most recently, refining capacity addition has taken place in the Asia-Pacific and Middle East. In order to increase the demand, we have decided to set up Rs 3,150-crore polypropylene project here which will be commissioned by next year,” the official said.