South India's first private refinery by 2011
By the end of next year ‘south India’ will get its first privately-owned refinery.
PETROWATCH learns Hyderabad-based Nagarjuna group’s under-construction refinery at Cuddalore in Tamil Nadu should begin refining ‘sweet’ crude in December next year in a “trial run” of the 6m t/y refinery’s ‘crude distillation’ and ‘vacuum distillation’ units – the core of any refinery - and its ‘fluidised catalytic converter.’ In February 2012, ‘secondary processing units’ like the ‘diesel-hydro upgradation unit’ and the ‘delayed coker unit’ could also be commissioned, allowing Nagarjuna to begin refining ‘heavy’ and ‘sour’ crude oil from the Middle East.
With a Nelson Complexity Index (NCI) of 8.7, the Cuddalore refinery will compare well with upcoming state-owned refineries like Bharat Petroleum’s Bina project in Madhya Pradesh and Hindustan Petroleum’s Bhatinda project in Punjab. Cuddalore will refine crude oil with an API between 27 degrees and 30 degrees, half of which will be bought from global oil major BP while the rest will be sourced through ‘spot’ and ‘term’ contracts.
Petroleum products from Cuddalore will be sold in the Indian market through a long-term contract with IndianOil. Some petrol, diesel, jet fuel and naphtha will also be sold to BP for export.
When commissioned, Cuddalore will sharply reduce southern India’s dependence on petrol, diesel and LPG supplies from western and northern Indian refineries. According to an analyst, demand for petroleum products is higher in southern India than in the rest of the country.
For example, India’s total demand for diesel grew 5.9% every year between 2002 and 2009 but grew 6.9% every year in southern India and 8.1% every year in Tamil Nadu. “In the coming years,” he says, “the supply shortfall for petroleum products in south India will significantly increase.
Even right now, IOC can meet local demand only by importing LPG and diesel from Gujarat or the international market.”