HPCL’s Vizag refinery to soon process more Russian and Arab sour crude in a boost for refining margins

Vizag refinery - which can process over 200 grades of crude oil - has the largest capacity among three refineries that HPCL owns.

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26 Aug, 2025 12:21

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State-run oil marketing company Hindustan Petroleum's Vizag refinery could see a sharp improvement in its Gross Refining Margin (GRM) as the management has indicated at processing more of the high sulphur crude oil - or sour crude - including both Russian as well as Arab grades.

A higher share of tougher or sour grade crude, which has higher sulphur content, would improve the refining margin of HPCL’s Vizag refinery to $12-14 per barrel from the current average of $8 per barrel, R Ramakrishnan, executive director of HPCL told Moneycontrol.

Ramakrishnan said the ratio of processing of high sulphur to low sulphur crude at the Vizag refinery would be 80:20 after the commissioning of RUF (Residue Upgradation Facility), versus the current 60:40 ratio in the next 2-3 months.

“Tougher crude is sold below the price (of benchmark such as Brent). This will help HPCL in increasing revenue,” said Ramakrishnan.

Oil marketing companies (OMCs) are increasingly buying cheaper crude such as the Russian sour grade Urals, as their refiners are compatible to refine high sulphur crude. During Q4FY25, Russian crude constituted 32-33 percent of HPCL’s total crude consumption. Read More

HPCL has expanded the capacity of its Vizag refinery to 15 mmtpa (million metric tonne per annum) from 9.5 mmtpa. The commissioning of RUF unit at the Vizag refinery is in the final stages of modernisation. The unit, India’s first such facility, would boost the efficiency of the refinery to ensure 93 percent of the crude would be turned into refined products such as petrol, diesel and LPG.

The improvement in GRMs from HPCL’s largest refinery would lead to better margins for the company, said the management. In 2024-25, the company’s GRM fell to $5.74 per barrel from $9.08 per barrel in the previous year.

Vizag refinery - which can process over 200 grades of crude oil - has the largest capacity among three refineries that HPCL owns. The Mumbai refinery has the capacity of 9.5 mmtpa while the upcoming 9 mmtpa greenfield refinery in Rajasthan’s Barmer district will be commissioned by the end of 2025.

The petroleum products currently manufactured at the Vizag refinery are LPG, petrol or motor spirit (MS), high speed diesel (HSD), aviation turbine fuel (ATF), naphtha, propylene, among others.

These products are then evacuated to marketing terminals, moved along the coast through tankers, and also transferred through cross-country pipeline from Visakhapatnam to Secunderabad via Vijayawada, and its extension from Vijayawada to Dharmapuri.

(The reporter was at HPCL’s Vizag refinery at the invitation of Ministry of Petroleum and Natural Gas)