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Govt forms panel to boost country's refining capacity through 2040

Business Standard:  June 16, 2016

New Delhi: The Petroleum Ministry has set up a high-level working group that will suggest a roadmap for enhancing India's crude oil refining capacity over the next two-and-a-half decades through 2040. The idea is to align the country's energy portfolio with the changing trends in favour of a diversified fuel mix and the transition towards cleaner sources of energy generation.

"It has been envisioned that the energy mix in 2040 could be entirely different than what it is today. Also, new capacities in petroleum refinery will depend upon aggregation of demand for different petroleum-derived products, which itself depends upon substitution by other forms of energy and government policies," the ministry said in an order setting up the panel.

It added the Working Group will prepare an Approach Paper for capacity expansion by Public Sector Undertaking (PSU) refineries for meeting the growing demand for petroleum products in the country by 2040. The 12-member panel will be headed by an Additional Secretary in the oil ministry. The members of the panel include representatives from the three Oil Marketing Companies (OMCs) and private refiners including Reliance Industries (RIL) and Essar Oil.

The Working Group will have a tenure of three months and its terms of reference include assessing India's primary energy requirement through 2040; assessing the likely technological developments in different energy fields; and developing a primary energy mix with break-up in terms of oil, gas, coal, nuclear, solar, hydro, and biofuels.

The group will also assess the demand for major petroleum products in the light of advancements in use, substitution by other forms of energy and the ongoing drive on energy efficiency and other policies. The group will frame the energy Approach Paper for India, among the fastest developing countries in the world, at a time when the world energy demand is expected to double in the next 30 years, the ministry said.

India's primary energy consumption grew at a Compounded Annual Growth Rate (CAGR) of 3.46% over the decade ended March 2015 to 14,090 Peta Joules from 10,024 Peta Joules in 2005-06, according to data sourced from the Ministry of Statistics and Programme Implementation (MoSPI). Energy production by primary sources shows coal and lignite account for 75% of total annual production, crude petroleum provides 11% while 9% of the energy comes from natural gas.

India had a total crude oil refining capacity of 230 million tonne (MT) at the end of March 2016, according to data sourced from the oil ministry. Public sector refiner Indian Oil Corporation (IOC) alone accounted for 30% or 69 MT of the installed refinery capacity while 80 MT was contributed by private refiners RIL and Essar Oil.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.