India’s second biggest state-run refiner Bharat Petroleum Corporation Ltd (BPCL) plans to spend about ₹13,000 crore on expanding its Numaligarh refinery in Assam by 2017-18.

The company plans to expand the Numaligarh refinery to 9 million tonnes from the current 3 million tonnes, Chairman and Managing Director S. Varadarajan said.

“We are still at the drawing-board stage for the expansion. We need tax concessions both from the central and state governments to make the expansion economically viable,” he said.

Crude oil output

Numaligarh refinery, which was conceived and designed to process locally available crude from the north eastern oilfields, has been operating at less than its capacity due to dwindling crude oil output in the region.

BPCL now plans to process imported crude oil after expansion of the unit, he said.

A 1,338-km, 6 million-tonne-a-year pipeline will be built from Dhamra Port in Odisha to Numaligarh to feed the expanded refining capacity with imported crude.

Feasibility study

Techno-economic feasibility study for the refinery expansion project has been completed and Engineers India Ltd (EIL) is now preparing a detailed feasibility report (DFR), he said, adding that route survey for the crude oil pipeline has been completed and DFR preparation is in progress.

Numaligarh refinery operated only at 83 per cent of its nameplate 3 million-tonne-a-year capacity in 2012-13. It earned a net profit of ₹144.26 crore on sales of ₹8,752.88 crore.

BPCL plans to expand the refining capacity by setting up new process units that are capable of processing imported high sulphur crude oil. High sulphur crude, compared to low sulphur oil being cheaper, is expected to have a positive impact on its margins.

BPCL also plans to raise the capacity of its Bina refinery in Madhya Pradesh to 8 mt from the current 6 mt.

“We plan to complete the Bina refinery expansion by December 2016,” Varadarajan said.

BPCL, which also operates a 12-mt refinery at Mumbai, is also raising the capacity at its Kochi refinery by 6 mt to 15.5 mti by 2015-16.

Currently, India has a refining capacity of 217 mt.