10-09-2012

BPCL starts preliminary work for Bina expansion

Bharat Petroleum has started the preliminary work for expansion of its youngest refinery, the 6 million tonne per annum (mtpa) crude oil processing unit at Bina in Madhya Pradesh. The expansion, to be completed by 2015, will take the refinery’s capacity to 9 mtpa. “The preliminary study has started and our consultants are in the process of preparing the pre-feasibility and technical feasibility report,” said R K Singh, chairman and managing director, BPCL.

The first phase of the refinery (6 mtpa), built under a joint venture with Oman Oil Co and called Bharat Oman Refineries (BORL), started production in May 2011. The company had said at that time that it plans to go for a low-cost expansion of the refinery to 9 mtpa after production stabilised. One year on, it has indeed initiated the expansion process, though it is at a very preliminary level and will take time to fructify. Singh said there are a couple of things to be considered along with the expansion, such as increasing the capacity of the product pipeline for evacuation of the refined products, the exact amount of investment required, the purchase of equipment, the shutdown period for expansion and the turnaround time.

These details are being studied currently and a report will be issued by Engineers India (EIL) shortly, after which the company will start the process of getting approvals. State-owned EIL had advised the company for building the first phase of the refinery. “What we plan to do is that along with the refining operations, we will simultaneously continue the elementary processes such as sourcing of machineries, roping in contractors, building the foundation, etc. This will help us in completing the expansion process in record time,” said Singh.

BPCL plans to complete the ancillary activities in the next three years and keep everything for the expansion ready. It will then shut down the refinery for 60-75 days during which the old equipment will be replaced by higher-capacity new equipment. The entire process is likely to take three years and a few months and could take an investment of up to Rs 1,000 crore, said Singh.

“While India has a glut of refining products, not all of them find their way into the domestic market. As a result, BPCL and HPCL (Hindustan Petroleum) can’t meet their customer demand through their own refining capacities and have to depend heavily on private refiners such as Reliance Industries and Essar Oil,” said an analyst with an international brokerage. Currently, BPCL sources 8 mtpa refined products from other refiners, including Indian Oil, Reliance Industries and Essar Oil. The expansion will help bring this bill by 3 mtpa.