With India just months away from launching its first greenfield integrated refinery complex in nearly a decade, S&P Global Commodity Insights said the spotlight has shifted to medium sour grades such as Russia’s Urals and Iraq’s Basrah.

HPCL Rajasthan Refinery (HRRL), an integrated refinery and petrochemical complex with a capacity of 9 mt per annum (MTPA), is currently under construction in Pachpadra, Balotra district of Rajasthan. Certain units have already entered the pre-commissioning stage.

The complex, jointly built by state-run Hindustan Petroleum Corporation (HPCL) and the Rajasthan government with equity stakes of 74 per cent and 26 per cent, respectively, is poised to commence operations as India is projected to surpass China’s oil demand growth rate. 

Abhishek Ranjan, South Asia oil research lead at S&P Global Commodity Insights, said, “The refinery is designed to run with over 83 per cent of imported medium-grade crude and the remaining being domestic crude. Russian Urals could indeed be a favourite choice.”

The refinery will try to diversify its crude basket for better security as future tightening of Russian barrels cannot be ruled out. The Arabian and Basrah grades are next in the top three crude types that the refinery will use, he added.

Ranjan said that the refinery’s configuration includes large vacuum distillation, delayed coker and petro-fluid catalytic cracking units, which should also allow it to process various heavier crudes.

Oil Minister Hardeep Singh Puri has described the Rajasthan refinery as the “jewel of the desert,” highlighting its potential to bring many socioeconomic benefits, including the creation of thousands of jobs and a reduction in the country’s reliance on imported petrochemicals.

Incorporated in September 2013, HRRL has experienced cost escalation from the original estimates due to significant increases in commodity prices and an expanded scope of work. In addition, pandemic-led lockdowns resulted in delays in awarding orders and construction activities, pushing the completion deadline back by a few years.

The refinery is expected to mainly produce Euro 6-grade high-speed diesel, gasoline and value-added petrochemical products, such as polypropylene, butadiene, linear low-density polyethylene, high-density polyethylene, benzene and toluene.

The Paradip Refinery, operated by the state-run Indian Oil Corp., was the last standalone refinery commissioned in India in 2016. It has an installed annual capacity of 15 mt.

Since then, many refiners have pursued expansion projects, but HRRL will be the first standalone refinery to be developed.

“The new Rajasthan refinery of HPCL and the state government will be able to cater to the demand-intensive northern India, which has a net deficit in terms of refined oil products balance,” Ranjan said.

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