BPCL’s two-year plan will see capacity grow by 10 mt

Bharat Petroleum Corporation Ltd (BPCL) is on course with its refinery expansion plans till 2016; this will see capacity increase by nearly 10 million tonnes (mt) to 42 mt.

“From BPCL’s point of view, the idea is to ensure that 80-90 per cent of demand should be met by its own production,” S Varadarajan, Chairman and Managing Director, told Business Line .

Dream Plan

This target is part of the company’s ‘Dream Plan’ for the period 2011-16, which focuses on a host of growth areas, right from refining to exploration and production.

“When I took over last October, it was at the mid-point of the Dream Plan and, therefore, a good time to reassess whether we were delivering on the promises. In refining, we have done extremely well, both in margins and volumes,” Varadarajan said.

The Kochi Refinery expansion from 9.5 mt to 15.5 mt is on track and the targeted completion date is mid-2016.

The Mumbai refinery, meanwhile, will see units being upgraded and old ones phased out.

Most of these projects are on course and will be executed over the next couple of years.

By 2016, Kochi will be operating at close to 16.5 mt with a capacity of 15.5 mt.

Mumbai is set to operate at nearly 14 mt and more efficiently with new units. According to Varadarajan, the Bina refinery in Madhya Pradesh has “stabilised very well” and a low-cost expansion is being planned from the current 6 mt to 8.5 mt.

“Demand in the North justifies such expansion, which will take 24 months. In terms of performance, I would think our refineries are doing fabulously well as per our Dream Plan,” he said.

There were irritants in the recent past on water availability in Bina, but steps have been taken to ensure this does not come in the way of the refinery’s expansion.

Plans are under way to further increase water availability in the region, which will take care of future capacity growth.

“We should ideally look at an expansion of another 6 mt, which will take Bina closer to 15-16 mt, but this will happen only in the next phase, beyond the Dream Plan,” Varadarajan said.

The capacity of the Numaligarh Refinery in Assam will remain at 3 mt as the biggest hitch to raising it is crude availability.

While the feasibility of importing crude is being explored, this will have to be balanced out by demand in Uttar Pradesh and Bihar, where products from Numaligarh will be supplied.

BPCL believes demand in the northern region will continue to grow.

While Bina can be expanded up to 15 mt, another option is to set up a new facility in Uttar Pradesh, where the company has land.

“Eventually, any decision will depend on demand and the economic viability of such expansion,” Varadarajan said.