IOC chief rues uncertainty of investment return

The Chairman and Managing Director of IndianOil, Sarthak Behuria, on Thursday rued that the “much needed investment in the oil refining industry is not attaining its required level” because of “uncertainty of investment returns”.

Speaking at the 15th Refining Technology Meet organised here by the Centre for High Technology and sponsored by Chennai Petroleum Corporation Ltd, Behuria observed that the growth of the oil refining sector is determined by efficient supply chain management, improvement in energy efficiency and additional capacity creation.

This additional capacity creation, he said, requires heavy investment. “This is where the problem lies,” he said, in a guarded reference to the Indian scenario where oil marketing companies are forced to sell their main products at prices below the costs of production.

(Later, speaking to journalists, Behuria said that IOC, with a net worth of Rs 47,000 crore, had no problem in raising funds. In fact, all of its projects are on schedule. The naphtha cracker (petrochemicals) project associated with the Panipat refinery has reached the ‘pre-commissioning stage’ and would go on stream in a few months.)

Challenges

At the meet, which was held on the theme ‘Harvesting Excellence through Knowledge Partnerships: Challenge for the Hydrocarbon sector’, Behuria noted that the refining capacity in the Asia Pacific region was 25 million barrels a day. The product shortfall in the region is 4 million barrels a day. This demand attracts investment for production facilities or imports into the region, he said.

Another challenge faced by the oil refiners is product slate management. Refinery configuration presents a problem because on the one hand naphtha and gasoline are expected to be in surplus while on the other, diesel, fuel oil and bitumen are expected to be in deficit.

P. K. Sinha, Additional Secretary and Financial Advisor, Ministry of Petroleum and Natural Gas, noted that the Indian refining sector faced four major challenges – developing indigenous process technologies, optimisation of input and output, energy conservation and up-gradation and modernisation of refineries.

Observing that Indian refiners were “world class” in operation and maintenance of refineries, Sinha pointed out that they were still dependent on foreign vendors for technology.

“It is our responsibility to develop indigenous vendors,” he said.

Sinha said that Indian refiners had yet to perfect the art of optimisation, which refers to the refinery configuration keeping in mind the most economic choice of crude and the most profitable output products. “There is a lot to be gained by optimisation,” he said.

Introducing the theme of the meet, K. K. Acharya, Managing Director, CPCL, noted that ‘oil and gas’ accounted for 55% of India’s energy basket and would continue to dominate the energy scenario at least until 2030. Acharya stressed on the need for stepping up R&D for improved profitability.
Taken from Business Line