Indian Oil starts petrol production at Paradip refinery

PARADIP: Indian Oil Corporation has started production of petrol from the Rs 34,555-crore oil refinery facility on Sunday.

Prime Minister Narendra Modi will dedicate the 15 MMTPA Paradip Refinery to the nation on February 7.

The commissioning of the refinery comes after 14 years, owing to many flip-flops by the state government on incentives, withdrawal of its foreign partner Kuwait Petroleum and frequent stiff opposition from locals, state politicians and NGOs, apart from two killer cyclones.

The foundation stone for the refinery was laid by former Prime Minister Atal Bihari Vajpayee in May 2002, which again was a full one decade after the project was proposed by the P V Narasimha Rao government in July 1992.

“We have completed one of the most critical steps of the refinery today. With our 3.9 MMTPA motor spirits unit going critical, we have only VGO-HDT (vacuum gas oil hydrotreater) to be commissioned that will be done by mid next month.”

“This refinery complex is the most modern facility in the country and also our first and the largest greenfield facility on the East Coast,” Ramjee Ram, executive director-in-charge of the Paradip Refinery Project, told reporters during a plant visit ahead of formal commissioning.

This 15-million tonne refinery is also the largest on the country’s Eastern coast and is equipped with the latest technology, including IOC’s own patented IndMax technology for better and higher LPG output.

The Rs 34,555-crore project, which had incurred a cost overrun of over Rs 3,500 crore due to delays that it had to face apart from two cyclones, is coming up at a 3,350-acre area adjoining the Paradip Port.

The project includes a sprawling, modern residential complex that boasts of a Delhi Public School and a modern stadium complex, among others. The refinery complex spans over 2,100 acres.

It also has a 17 metre deep natural draft for its oil jetty that can berth very large ships and has captive multi-fuel power plant that can generate over 360 MW of electricity.

Though the refinery will primarily be processing high-sulphur crude oil, cheaper by $2-3 a barrel, Ram said the facility can process any type of crude from the Gulf nations, Africa and South America.

However, he said that a final call on the feed would be taken by the central procurement cell, which decides the mix of the crude to be sent to different refineries.

Due to the high-end technology being deployed, the company expects the refinery to offer very high margins to the tune of $6-7 a barrel over the average refining margin $10-12 earned by IOC at present.

“We expect our GRM to be in the range of $15-16,” Mr Ram said. This is expected to boost the bottom line of IOC as it will improve the overall gross refining margin (GRM) by $2-3 a barrel, Mr Ram said.

Paradip will be IOC’s first refinery to be integrated with a petrochemical complex which will involve an investment of another Rs 30,000-35,000 crore.

While the work on a polypropylene unit inside the 3,350-acre refinery complex is already on, it intends to begin work soon on methyl, ethyl, glycol plant, coke gasification unit, paraxylene plant and purified terephthalic acid project for which approvals are pending.

Ram said that though normally a new refinery runs at 60 per cent capacity initially, and takes 2-3 years to reach full capacity, the 3,00,000 barrels a day refinery is designed to attain 80 per cent capacity, to begin with and full capacity by next March, thanks to newer technologies being installed at the facility.

The refinery will produce LPG, propylene, petrol, diesel, naptha, kerosene ATF and pet coke, which will mainly serve the Eastern and South-Eastern markets.