India’s fuel demand is growing quickly with the expanding economy, and subsidised prices mean have sheltered consumers from the rise in international oil prices to over $100 a barrel this year.
Diesel demand would grow by around 8-10 percent this year, but the country should avoid the need to import the fuel if all refineries run without glitches, the head of India’s third-largest refining company said.
“If all the refineries are running, there is no turnaround or no technical hitch in the operation of the refineries, I don’t think imports are necessary,” Singh said.
Subsidized diesel prices have made the fuel cheaper than fuel oil.
That is encouraging power generators to switch to diesel from fuel oil and boosting diesel demand, at a time when supplies in Asia are already expected to be strained as China deals with power shortages.
BPCL plans to expand the Kochi refinery in the southern Indian state of Kerala to 300,000 bpd from 190,000 bpd, Singh said.
The Kochi expansion is scheduled to come on line in March 2015, the plant’s executive director E. Nandakumar said.
The company plans to boost capacity at the Bina refinery in central India to 180,000 bpd from 120,000 bpd, Singh said.
BPCL is in the midst of starting up the new Bina plant, and expects the refinery to reach capacity of 120,000 bpd in the next three months, Singh said.
At Kochi, the company was also planning a fluid catalytic cracking unit, he added.
“We’re thinking of putting a petrochemical complex there,” he said.
“It will be petrochemical products based on propylene. So we’ll have to add additional FCC there which will give us propylene.”
The expansion will cost BPCL around 180 billion rupees ($4 billion), he said.
Profit margins for refining crude were good, he said, pegging the spread between crude and the principal fuels produced through refining at $18-$20 a barrel.
BPCL’s is India’s third-largest refiner by capacity after Indian Oil Corp and Reliance Industries, he said.
BPCL also operates a 240,000-bpd refinery in Mumbai and has a majority stake in a 60,000 bpd refinery in northeast India.
