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India, the world’s fourth largest refiner, will add as a lot as 56.6 million tonnes every year (mtpa) of crude oil refining capacity within the subsequent seven years of which 84 per cent will probably be by brownfield growth.
At current, the world’s third largest crude oil client has a cumulative refining capacity of nearly 254 mtpa, or slightly over 5 million barrels per day (mb/d).
According to the Ministry of Petroleum and Natural Gas (MoPNG), India will add 9 mtpa of refining capacity by greenfield growth.
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Between 2014-2023, India added a complete of 38.9 mtpa of refining capacity, of which 39 per cent was greenfield and the remaining 61 per cent was brownfield, whereas throughout 2010-14, it added 29.7 mTPA capacity by brownfield growth.
As per the Centre for High Technology (CHT), a technical wing of MoPNG, the refining capacity of Indian refineries is projected to enhance by about 56 mtpa by 2028.
In FY23, Indian refineries processed 5.13 mb/d of crude oil, or 255.2 million tonnes (mt), towards 4.85 mb/d or 241.7 mt. In August 2023, the crude pressed stood at 5.28 mb/d or 21.9 mt (provisional), whereas throughout April-August in FY24, the crude processed stood at 5.25 mb/d or 109.5 mt.
As of September 2023, India had a complete crude oil transportation pipeline of 10,938 km with a capacity of 153.1 mtpa. The refined merchandise transportation pipeline is 22,973 km with a capacity of 149.3 mtpa.
Refining push
The authorities’s refining push is on account of India’s rising consumption of crude oil as its industrial, building and manufacturing sectors broaden. Besides, after the Russia-Ukraine war, Indian refiners have emerged as one of the important thing refining locations.
CareEdge Ratings stated that FY23 marked an distinctive interval for Indian refiners. They achieved exceptionally excessive gross refinery margins (GRMs), primarily attributed to disruptions within the demand-supply dynamics ensuing from the outbreak of the Russia-Ukraine conflict in February 2022.
On increased refining in FY23, CareEdge stated the overcapacity operation is primarily attributed to strong home and export calls for for refined merchandise. The availability of comparatively cost-effective Russian crude, restricted additions to refining capacities worldwide, a considerable post-pandemic surge in refined product demand, and geopolitical disruptions have collectively contributed to Indian refiners constantly attaining considerably increased GRMs than the benchmark Singapore GRMs over the previous three years. Consequently, this has led to an enchancment within the credit score profile of Indian refiners.
CareEdge Ratings Director Hardik Shah stated “In Q1FY24, Indian refiners achieved wholesome GRMs, starting from $7 to $12 per barrel, contingent upon the complexity of their respective refineries. As we glance forward to the rest of FY24, regardless of a rise in crude costs and potential constraints on the supply of Russian crude, GRMs are anticipated to stay throughout the vary of $9 to $10 per barrel. This expectation arises from the anticipation of declining margins when processing Brent crude, juxtaposed with the anticipation of substantial margin growth when processing Russian crude.”
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