The Indian petroleum refining industry comprises of private, public and joint venture refining companies.  Of the total installed capacity of 234 million metric tonnes per annum (MMTPA), 34.1 per cent comes from private sector, 6.4 per cent from joint venture and 59.5 per cent from public sector.

All the public sector refineries are owned by state-run oil majors Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), Hindustan Petroleum Corporation Ltd (HPCL) and Oil and Natural Gas Corporation Ltd (ONGC). Reliance Industries Ltd (RIL) and Essar Oil Ltd (EOL) are the private sector refiners. The two joint venture refining companies are HPCL Mittal Energy Limited (HMEL) and Bharat Oman Refineries Limited (BORL).

Indian refineries are quite diverse in respect of their capacity. On one hand, there are small refineries such as ONGC, Tatipaka with a capacity of 0.066 MMTPA and IOCL, Digboi having a capacity of 0.65 MMTPA. On the other hand, there are big refineries such as EOL, Vadinar with a capacity of 20 MMTPA; RIL, Special Economic Zone (SEZ), Jamnagar of 27 MMTPA; and RIL, Jamnagar of 33 MMTPA. RIL refineries are amongst some of the biggest refineries of the world.

Overall Product-mix

Refined petroleum products can broadly be divided into three categories-light distillates, middle distillates and heavy ends. Light distillates include Liquefied Petroleum Gas (LPG), Naphtha, and Motor Spirit (MS) also called Gasoline or Petrol. Middle Distillates include Kerosene, Aviation Turbine Fuel (ATF), and High SpeedDiesel (HSD)also called Diesel or Gas Oil. Heavy ends include Lube Oil, Furnace Oil (FO), Low Sulphur Heavy Stock (LSHS), Bitumen, Petcoke, etc.

Based on production of the petroleum products from all the Indian refineries for 2015-16, the overall yield of light distillates and middle distillates for all Indian refineries is 27.6% and 51.2% respectively. The low value FO/LSHS yield is 4.7%. The low yield of FO/LSHS is beneficial as it is a low margin product.

Product-mix varies significantly from refinery to refinery.RIL and EOL refineries have no Fuel Oil(Furnace Oil or Low Sulphur Heavy Stock) in their product-mix.Whereas, most of the fuel oil is produced by public sector refineries, mainly the older and un-modernizedones.

The yield of light and middle distillates has been increasing and that of FO/LSHS has been declining over the years, which shows that Indian refiners have been investing in the upgradation and modernization of their refineries.

Market Share of Various Refiners

Most of the petroleum products are marketed in domestic market by three state-owned refiners or oil marketing companies (OMCs) viz. IOCL, BPCL and HPCL, and two private refiners RIL and EOL. Other public sector companies such as GAIL India Limited, ONGC, CPCL, MRPL and NRL also market petroleum products in very small proportions. The most of the market share in domestic market belongs to OMCs, and RIL and EOL have only little market share. It is to be noted that market share of private companies has been increasing since 2012-13 and quite rapidly. The major boost for this increase came from petrol price deregulation in June 2010 and diesel price deregulation in October 2014.

Demand-supply Imbalance

India has overall surplus refining capacity i.e. total production of all the refined products exceeds the total consumption. Product-wise, there is deficit of LPG and surplus of other major products viz. Petrol or MS (Motor Spirit), Diesel or HSD (High Speed Diesel), SKO (Superior Kerosene Oil), ATF (Aviation Turbine Fuel) and Naphtha. Indian refiners have been investing in up-gradation projects with the aim to convert low value heavier oil fractions to high value light and middle distillates. This has resulted into surplus of MS, Diesel, SKO, ATF and Naphtha. However, deficit of LPG is primarily due to rapid growth in its consumption.

Date of Publication: 17 July, 2017

About Author: Satyendra Kumar Singh, B.Tech. (Chemical Technology) + M.B.A., is proprietor of Satsha Management Services-an award winning design engineering and management consulting company (www.satshamanagement.com). He possesses approximately 30 years’ experience in engineering consultancy in process and energy industries. Satyendra has authored several papers on energy, business and management, which have been published in some renowned journals/magazines such as ‘Chemical Engineering’, ‘Process Worldwide’, ‘Modern Manufacturing India’. He may be reached at satyendra.singh@satshamanagement.com, Ph. +919811293605.