Indian Oil Corporation partners with Chennai Petroleum Corporation to establish a brownfield project at Rs 100,000-cr capex

Government-owned Indian Oil Corporation Ltd (IOCL), India’s largest crude oil processor, has collaborated and joined hands with its subsidiary Chennai Petroleum Corporation Ltd (CPCL), to establish a joint venture company named Cauvery Basin Refinery & Petrochemicals Ltd (CBRPL) with an investment of Rs 100,000 crore. This venture is planned to be located in Nagapattinam, Tamil Nadu, and will be known as the Cauvery Basin Refinery (CBR), with a total capacity of 9 million metric tonnes per annum (MMTPA).

The primary objective of this brownfield project is to ensure continuous energy access to meet India’s escalating socio-economic demands. This expansion in refining capacity will enable IOCL to enhance petrochemical production and fulfill the growing demand in India. Additionally, IOCL’s brownfield expansion is expected to encourage both public and private sector refineries to invest in the expanding downstream petrochemical business in India.

As per a company statement, this joint venture guarantees uninterrupted energy supply to meet the increasing socio-economic demands in India. The statement mentioned, “We have allocated Rs 100,000 crore for these strategic brownfield capacity expansions. The project is proposed as a joint venture company, CBRPL, along with subsidiary CPCL, to address the upcoming demand for petroleum products and derivatives such as petrochemicals in India.”

IOCL contributes over 25 percent of the total capital expenditure (capex) incurred by the public sector units (PSUs) under the Ministry of Petroleum & Natural Gas, showcasing its leadership in the field. In the financial year 2022-23, IOCL achieved a capex of Rs 37,287 crore, surpassing the budgeted utilization value by 131 percent for the same financial year. The growth represents 31 percent more capital expenditure than the ministry’s budget for that year.

However, the ministry has allocated a capital expenditure of Rs 30,395 crore to IOCL for the current financial year, reflecting a decline of more than 18 percent from the actual capex incurred in the previous year. The company has reiterated its commitment to continue making substantial investments to expand energy and petrochemical sources.

Refineries operations
Amid sustained growth in India’s energy demand and continuous availability of discounted crude oil from Russia, IOCL reported refineries operating at a capacity utilization of over 103 percent and achieved the highest-ever crude oil processing volume of 72.4 million metric tonnes during the financial year 2022-23.

According to the company’s statement, “We continued to push boundaries to enhance the operational efficiency of the refineries. We expanded the crude basket by adding 36 new crude oil grades, bringing the total to 247 grades. We also undertook multiple projects to strengthen our core capabilities. In August 2022, we achieved a significant sustainability milestone with the commissioning of the second-generation (2G) ethanol plant at Panipat. Additionally, we commissioned the first Wet Sulphuric Acid Plant at Haldia and revamped the Linear Alkyl Benzene (LAB) unit at Gujarat.

Among the key projects currently under execution are refinery expansions at Panipat Refinery, increasing capacity from 15 million metric tonnes per annum (MMTPA) to 25 MMTPA; at Gujarat Refinery, from 13.7 MMTPA to 18 MMTPA; at Barauni Refinery, from 6 MMTPA to 9 MMTPA; and at Digboi Refinery, from 0.65 MMTPA to 1 MMTPA. Alongside these projects, the Cauvery Basin Refinery, with a capacity of 9 MMTPA, will contribute to a total augmentation of the refining capacity by over 26 MMTPA. This will consequently elevate the group’s overall refining capacity to about 107 MMTPA in the near future.

In addition to increasing refining capacity, IOCL is expanding its portfolio of value-added offerings. Under this initiative, the upcoming Catalytic Iso-Dewaxing (CIDW) units at Haldia and Gujarat refineries will enhance the production of Lube Oil Base Stock (LOBS), the foundational ingredient of lubricants. This move aims to bolster ‘atmanirbhar Bharat’ by reducing India’s import dependence by nearly 25 percent, while solidifying the company’s leadership in the Servo lubes segment. A 530,000 metric tonnes LOBS facility is also being established at the Panipat refinery.

Petrochemical capacity expansion
IOCL also made significant strides in petrochemical integrations. According to the company statement, success in petrochemical integration paves the way for investments in the refining sector, which are crucial for mitigating risks arising from business uncertainties, while enhancing the value of every molecule in the hydrocarbon chain. During the financial year 2022-23, the company expanded its petrochemical capacity from 3.7 MMTPA to 4.1 MMTPA. Achieving a 4 percent growth in paraxylene (PX) / para terephthalic acid (PTA), the company reached an annual petrochemical sale of 2.23 million metric tonnes.

Looking forward, the company has decided to maintain its progress towards self-reliance in India’s petrochemical sector through necessary strategic investments. These investments include the implementation of a 387,000 tonnes per annum of styrene unit and a 60,000 tonnes per annum polybutadiene rubber (PBR) plant at Panipat. These initiatives aim to support the growing demand and reduce imports of styrene and PBR.

Furthermore, the upcoming polyester yarn and fiber production facility at Bhadrak in Odisha, will enhance downstream integration in the textile industry, promote resource efficiency, and create employment opportunities. The company’s board has approved the establishment of the Paradip Petrochemical Complex in Odisha, with an estimated cost of over Rs 61,000 crore. This stands as IOCL’s largest single investment at a location, which will elevate the Petrochemical Intensity Index and strengthen India’s self-sufficiency in this critical sector.


DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com