Hope to achieve ‘1-1-1 goal’ for Green hydrogen, petrochemicals to be integral part of Indian Oil's growth story: Chairman

Indian Oil Corporation Ltd hopes that its green hydrogen initiatives and collaborations will accelerate the conversion of grey hydrogen to green and help achieve the ‘1-1-1 goal,’ Chairman Shrikant Madhav Vaidya, told Moneycontrol at the ‘India Energy Week 2023’. [Green Hydrogen 1-1-1 refers to the aim of reducing the price to $1 per 1 kilogram in 1 decade. ]

Indian Oil Corporation is the largest state-owned oil refining company, with a capacity of 70.05 million metric tonnes per annum. It is also one of the leading petrochemical producers in India.

Vaidya talked about the company’s petrochemicals expansion plan, the role of fossil fuels, and talent availability for its clean energy ventures, including green hydrogen. Edited excerpts:

Q: Indian Oil has made a move towards clean energy in the green hydrogen space. What kind of targets do you have?

A: Hydrogen and the refining industry go hand-in-hand. It's a raw material for me. So when I talk of hydrogen, basically, it's grey hydrogen today. But unless I create a demand for green hydrogen, the cost of green hydrogen will never come down. So the purpose of Indian Oil going in this way is that I have already got the demand for hydrogen.

I don't have to wait for hydrogen mobility to come for consuming green hydrogen. So I'll make green hydrogen and I'll progressively phase out my grey hydrogen. So by that, I can get the cost of green hydrogen down to that 1-1-1, which is the need of the hour for us to be really competitive. So that is the way we want to go. We will not wait for hydrogen mobility to come, but our industrial sector/refining sector will consume green hydrogen.

Q: While clean energy is emerging, hydrocarbons still dominate the market. What is your take on volatility in crude oil prices? Are we out of the volatile phase?

A: I'm not qualified to answer that question – whether we are out of the volatile phase. But yes, there was volatility and we really don't know how it will take off further. So I reserve my comments on that because I don’t really know how long this phase of uncertainty will continue. But yes, fossil fuels will continue to play a dominant role in our energy pie for many years to come.

Q. A lot has happened in petrochemicals in terms of margins and supply chain disruptions. How does the next fiscal year look for this business?

A: Petrochemicals are an integral part of Indian Oil's growth story. We have a term called petrochemical intensity, which means how much crude is converted to petrochemicals. We have a figure of about 7 percent now. That means 7 percent of my crude gets converted to petrochemicals.

Petrochemicals are basically the non-combusted use of crude oil. And we intend to take this 7 percent to 15 percent because petrochemicals protect us naturally from volatility in the market by way of uncertain cracks. Plus, India is a big importer of petrochemicals. So it makes all the more sense to make it here.

Q: Oil marketing companies made losses by keeping retail fuel prices stable. Now that crude has softened, will IOC end this financial year in the green?

A: Let's wait and watch for the financial year to end and we will know the answers.

Q: IOC is looking at an end-to-end solution for PET recycling. What kind of investments are going into that business and how significant will it be?

A: This is a beyond-business initiative. We are a leading corporate in the country. We feel it is our duty and responsibility to do something positive for the environment. So this particular initiative of recycling is in that direction. As a responsible corporate, we have launched recycled polymer grades in polypropylene.

Already it is happening and this PET bottle initiative is also a step in that direction… So we need to do something for the environment. We need to do something for the growing plastic menace that is happening, and this is a step in that direction.

Q: The budget has an outlay of Rs 35,000 crore for the petroleum ministry. How will oil marketing companies and other PSUs benefit from this?

A: Actually, there was an announcement for the energy transition budget, there was an announcement for the green hydrogen budget and an announcement for biofuels. We are waiting for the details. As Indian Oil, we are there in all the spaces. So we'll work out how we can avail of those budget announcements.

Q: In the rush to get into clean energy and other new spaces – many companies are getting into green hydrogen, for example – how easy or tough is it to get talent for these ventures?

A: Reskilling is one of the ways by which we are going ahead and we have got a pool of people coming in every year. So we have changed the way we are training them, not only in the conventional business, but also in the new business. And as Indian Oil, you're aware, we only take at the frontline level. So it becomes all the more important for us to train them at a very young age so that they are there when the economies of scale happen in these new forms of energy. We will have a readymade talent pool available.