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Indian Oil Corp reviews refinery expansion plans

NEW DELHI (Reuters) - Indian Oil Corp (IOC) IOC.NS, the country's largest refiner, is reviewing its refinery expansion plans because of a gradual rise in use of cleaner fuels and changing demand patterns in Asia's third-largest economy, its chairman said.

FILE PHOTO: A woman walks past a logo of Indian Oil outside a fuel station in New Delhi, India, August 29, 2016. REUTERS/Adnan Abidi

In 2018 India set a target for a 77% jump in refining capacity to about 9 million barrels per day (bpd) by 2030, with IOC raising capacity to 2.6 million bpd.

However, Petroleum Planning and Analysis Cell, an oil ministry think-tank, is revising the supply and demand scenario for the country.

“Based on that study we will revise our numbers as well,” IOC Chairman S.M. Vaidya told a news conference on Monday.

“Demand is not really destructive in our country. It has got deferred. Nevertheless, we are reviewing our refinery expansion plans.”

Vaidya said that IOC’s focus is on adding higher capacity through expansion of existing units and raising petrochemical capacity to protect margins.

“As far as grassroots projects are concerned, we are reviewing all projects,” he added.

IOC will also review expansion of its Paradip refinery when the revised supply and demand figures are available, he said.

IOC's joint venture with other state refiners along with Saudi Aramco 2222.SE and Abu Dhabi National Oil Co to build a 1.2 million bpd refinery on India's west coast has also been held up because land has yet to acquired for the project, Vaidya said.

Indian refiners are also gearing up to supply advanced, lower-emission fuels as well as battery swapping facilities, electric vehicle charging points, biodiesel and compressed biogas at their fuel stations.

Fuel demand in India has recovered in the first two weeks of this month, with IOC selling 1% more gasoline than a year earlier while diesel remained down by about 9%, Vaidya said, adding that demand could reach pre-covid levels within a quarter if the current trend continues.

IOC’s refinery run rate has improved “marginally” this month from an average 70-75% in April-August, he added.

Reporting by Nidhi Verma; Editing by David Goodman

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