Choice between Koyali or Panipat for Indian Oil

Vol 5, PW 22 (19 Dec 01) Midstream & Downstream

Koyali or Panipat For Indian Oil it's a tough choice.

IOC directors are hotly debating whether to continue with plans to double capacity at the 6m t/y Panipat refinery in Haryana, or add an extra 4.3m t/y capacity to the 13.7m t/y refinery at Koyali in Gujarat. One thing is clear: they can't do both.

Demand studies by IOC reveal a product deficit of just 7m t/y in north and north-west India - the market for both refineries. Reliance is also trying to tap this market with excess product from its 27m t/y refinery at Jamnagar.

PETROWATCH has collated the following information into a table after conversations with various sources. It illustrates IOC's 'for and against' arguments for each proposal: Panipat or Koyali Issues Koyali expansion Panipat expansion Additional capacity 4.3m t/y 6m t/y Capital investment Rs4,846cr ($1bn) Rs5,939cr ($1.24bn) Investment cost/tonne of crude Rs11,270 ($234) Rs9,898 ($206) Built in cushions Very little IOC estimates that crude processing can be increased by an additional 3m t/y at Panipat and 2m t/y at Mathura at a later date Processing cost (Rs/tonne of crude) Overall Incremental Rs312 ($6.5) Rs238 ($4.9) Rs480 ($10) Rs263 ($5.5) Product realisation (Rs/tonne of crude) Average crude cost Product realisation Net realisation Rs10,144 ($211) Rs10,399 ($216) Rs11,332 ($236) Rs11,615 ($241) Rs1,188 ($24.75) Rs1,216 ($25.33) Coke disposal No potential customers available Here IOC has identified the following potential customers: Suratgarh, Bhatinda, Panipat and Ropar power stations.

It's also ready to lower its price to compete with Reliance Quality improvement cost at current operational level Rs1,240cr ($258m) at 13.7m t/y capacity. IOC estimates that by using low sulphur crude and lower capacity (11.5m t/y) quality can be improved without any further investments Rs880cr ($183m) Why expansion According to IOC, the target market for Koyali is already in surplus because of product from the Reliance refinery IOC estimates that the target market for Panipat products is in deficit and that if it does not move fast to expand the gap will be filled by Hindustan Petroleum's proposed 9m t/y Bhatinda refinery