HPCL to invest over Rs25,000 cr, raise refining capacity to 500,000 bpd: report

20 Apr 2016

State-run refiner and fuel retailer Hindustan Petroleum Corp (HPCL) plans to invest over Rs25,000 crore (around $3.8 billion) over the next few years to ramp up refining capacity by two-thirds, and to meet demands of cleaner fuel, reports quoting a company official said.

HPCL will also be upgrading its petrol and diesel production units to meet fuel norms for Bharat VI norms compliant vehicles by the end of the decade.

A Reuters report citing HPCL refineries head B K Namdeo  said HPCL is looking to raise its crude processing capacity to about 500,000 barrels per day (bpd) by investing around Rs25,000 crore ($3.76 billion).

According to the report, HPCL is raising capacity at its various refineries, while upgrading these to produce cleaner petrol and diesel.

HPCL will be raising capacity at its Mumbai refinery from 1,30,000 bpd to 190,000 bpd by July 2019, while the Vizag refinery will nearly double capacity from 166,000 bpd to 300,000 bpd by July 2020.

''We will de-bottleneck the capacity of the two CDUs (crude distillation units) at Mumbai and replace a 46,000 bpd CDU at Vizag with a new 180,000 bpd crude units,'' Reuters quoted Namdeo as saying.

HPCL, the report said, is also looking at new supply sources and has for the first time signed a term contract with Nigeria's national oil company, NNPC, to buy 32,000 bpd of oil this fiscal year ending March 31.

However, as HPCL does not process all grades of crude offered by NNPC, it has entered into a swap agreement with trader Vitol for exchange of crude, the report added.

HPCL, which has traditionally been importing Middle Eastern crude, had to halt Iranian oil imports in 2012 after western sanctions. Now that the sanctions have been lifted, It is now looking to buy 20,000 bpd from that country.

But, Namdeo said, although sanctions targeting Iran's nuclear programme have now been lifted, there still remains issues like banking and insurance support for importing crude from the country.

Besides, HPCL has renewed its contracts to buy 50,000 bpd crude from Saudi Arabia and 20,000 bpd from Abu Dhabi National Oil Co (ADNOC).

HPCL has also contracted to buy 65,000 bpd of Basra crude from SOMO and about 25,000 bpd of Basra and UAE's Murban oil from Total with an option to raise the quantities.

HPCL plans to import more heavy oil as it is ramping up bitumen production and cutting fuel oil output, the report added.