India expands refining capacity

In the first major foreign direct investment (FDI) in India’s oil-refining sector, state-owned Hindustan Petroleum Corp Ltd (HPCL) and the Mittal Group of companies owned by Indian-born business baron L N Mittal, well known globally for the Arcelor takeover, have joined hands to implement the Rs157 billion (US$3.5 billion) Bhatinda Refinery project in Punjab now under construction.

The new capacities aim to plug the global shortage in refining that has failed to keep pace with demand. No new refinery has been built in the United States since 1976 because of environmental restrictions, though more than 200 million light vehicles in that country consume 11% of world oil output. It is estimated that the world’s energy needs will be 50% higher in 2030, with 55-60% of demand from conventional oil and gas.
Worldwide, refining capacity has increased by less than 2mbpd while consumption has risen by almost 4mbpd in the past couple of years. According to The Petroleum Economist’s annual refinery-construction survey, 9mbpd of new capacity is in the pipeline, which is almost double that recorded last year. India is looking to play a big role here.

Some analysts have cautioned against over-expansion in refining because of the slide in crude-oil prices and a global economic slowdown. However, most agree that “low-cost refiners” in India and the Asia-Pacific region, where the largest refinery additions are planned, will manage quite well.

Asia Times