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Indian Oil Corp, the country’s biggest refiner, will spend $22 billion on its expansion over the next five years, eyeing a capacity boost to 3.2 million barrels daily by 2030.
The company’s current capacity is 1.62 million bpd but as local demand for fuels rises fast, the Indian refining industry has stepped up to the task of boosting the country’s refining capacity substantially.
In February, a government report revealed India plans to increase its crude oil refining capacity by 77 percent to 438.65 million tons, or more than 8 million bpd, a government report has revealed. The increase would happen gradually over the next 12 years as Asia’s new powerhouse seeks to satisfy its growing demand for fuel.
The report said that the bulk of the capacity boost will come from facilities owned and operated by Reliance Industries, the local heavyweight, and Essar Oil, which Russia’s Rosneft acquired last year.
Reliance will start by increasing the capacity of one of its refineries from the current 33 million tons to 63 million tons annually, while Essar Oil will focus on its 20-million-ton Vadinar facility, upgrading its capacity to 45 million tons.
IOC will join the effort at all its four refineries, but at the same time, the company is already looking at other revenues streams, namely ethanol production and solar power. “We don’t want to remain a refining company alone ... in addition to refining we will be venturing out in different areas like petrochemicals and alternate fuels,” IOC’s head of refineries, B. V. Rama Gopal, told media.
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Even with the diversification plans, crude oil and fuels will likely continue to contribute the bulk of revenues as India becomes the world’s main driver of oil demand. This January, crude oil imports hit a record at 4.93 million bpd, up by double digits compared to both December 2017 and January 2017, according to data compiled by Thomson Reuters Oil Research & Forecasts.
India’s energy consumption is expected to grow the fastest among all major economies by 2035, according to the BP Energy Outlook from 2017. Economic growth in India is also expected to be strong over the next few years, supporting fuel consumption as a growing number of the huge population enter a higher-income slot and buy their first cars.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.