IndianOil to sanction $927m Koyali expansion

Vol 15, PW 12 (15 Dec 11) Midstream & Downstream

IndianOil directors are expected to take a Final Investment Decision on the proposed Koyali refinery expansion project on December 20.

If approval comes through, an in-house IOC team and state-owned Engineers India could soon begin preparing a Detailed Feasibility Report (DFR) on increasing capacity at the 13.7m t/y Gujarat refinery to 18m t/y at an estimated cost of Rs4858cr ($927m). “We are likely to begin preparing the DFR in the first quarter of 2012,” confirms an IOC source.

He adds the DFR alone is estimated to cost Rs25cr ($4.8m) and could take up to 24 months to complete and evaluate. IOC could then take another 36 months to implement the expansion project.

“I believe Koyali’s expanded capacity can be commissioned by 2016-17,” we are told. Rising diesel demand in India is the driving force behind IOC’s Koyali expansion plans, adds an industry source.

IOC wants to increase Koyali’s diesel production capacity from 5.5m t/y to 9m t/y and also wants to raise naphtha production from 1.2m t/y to 1.9m t/y. But it must first acquire at least 55 acres of land near the refinery to house an additional 1.5m t/y ‘hydrocracker unit’, a 1m t/y ‘vacuum unit’ and a 45m t/y ‘hydrogen generation’ unit.

“We have identified land at nearby Bajwa village,” says IOC. “We are only waiting for board approval before we begin buying land from local farmers at market rates.

” IOC’s Feasibility Report (FR), prepared in February this year and approved by its Project Evaluation Committee in September, suggested directly increasing capacity to 18m t/y instead of only to 16m t/y. “But if we’d opted for 16m t/y no land was needed,” we hear.

IOC has budgeted Rs88cr ($16.8m) for 55 acres of land.