Panipat refinery expansion firmly on track

Vol 4, PW 16 (13 Sep 00) Midstream & Downstream

Banking circles report a determination at Indian Oil Corporation to proceed with its Panipat refinery expansion in Haryana, despite indications of over-supply in the Indian economy.

"They are very committed to this expansion," reveals a source involved in the project, "They went ahead without the financing in place." Indian Oil's plans to hike capacity at Panipat from 6m t/y to 12m t/y by 2004 at an estimated cost of Rs3,365 ($784m). Present all-India capacity is between 102-109m tonnes a year (depending on which figure you believe!) and set to rise further.

So is an expansion warranted, given persistent reports that refining capacity in India is saturated "There is over-supply today but it doesn't mean that there will be over-supply tomorrow," reveals a source, "The extra capacity is not coming on stream today, it is coming on stream in 2004." With annual demand for petroleum products rising by an average 6% a year, argue supporters of the expansion, demand in India will continue to exceed supply in 2004 and beyond. Indian Oil confirms that Engineers India has been selected as the project management consultant and that tenders for the execution, procurement and construction contract have been issued.

Between April and December 1999, Panipat refinery throughput was 2.78m tonnes, a rise of 113% over the same period last year.