MC Interview|NRL expects commissioning of expanded refinery by Dec 2025, says MD

Bhaskar Jyoti Phukan, Managing Director, Numaligarh Refinery Limited (NRL)

Numaligarh Refinery Limited (NRL) expects to commission its expanded refinery by December 2025, Managing Director Bhaskar Jyoti Phukan told Moneycontrol in an exclusive interview.

The Assam-based company is hiking capacity by 6 million tonnes per annum to 9 MTPA. Besides, the Oil India Limited (OIL) subsidiary is setting up a crude oil import terminal at Paradip Port in Odisha and laying about 1,640 km of pipelines for transportation of imported crude oil to home base Numaligarh, in Golaghat district.

The company is also setting up the country’s first biofuel refinery which would use bamboo as feedstock. During the interaction, Phukan said the biorefinery has achieved mechanical completion and the plant would be fully functional by mid-2024.

Edited excerpts:

What is next in the crude pipeline project?

We are expecting mechanical completion by April or May. We have crossed Majuli towards the north bank of the Brahmaputra. What remains now is the Majuli to the south bank of Brahmaputra stretch for which pilot boring is already over. Once you do a pilot boring, you have to enlarge the diameter of that drill, so that the pipeline passes through. We are in the process of reaming that particular pilot. So, if everything goes well, by the end of April we should be crossing the Brahmaputra, a major milestone we are targeting. Once mechanical completion is done, we will do commissioning parallelly.

When would the new refinery be commissioned?

We are targeting commissioning of the expanded refinery in the third quarter of FY26. That means by December 2025, it should be up and running. Once the pipeline is commissioned, it will get us crude into the refining premises. We have finished around 53 percent of the refinery construction.

What is the plan for crude sourcing?

We have to rely on imported crude, that's why we are laying pipeline from Paradip. We have started identifying a bouquet of crude oil which can be imported and our effort is to increase the basket. So far we have identified around 49 varieties of crude which can be processed in our refinery and we are continuing with the study. The effort is to increase the basket. We have kept enough flexibility to process a large variety of crude so that price advantages can be taken when the opportunity is presented.

Are you in talks with countries for crude sourcing?

We have not started the discussion; it is too early. Crude has its characteristics, so first you have to identify which crude your refinery can take and after that you can have a discussion. We have to strategise what kind of basket we will finally arrive at based on the economics and also, we have to see the yield. We are trying to frame a strategy putting all this together.

As of now, we cannot process Venezuelan oil as it is very heavy but for Russia, if it is economical and compelling, we are definitely looking at that.

What is the status of the 2G or second-generation biorefinery being set up in Assam?

We are putting one of the biggest 2G biorefinery plants not only in the country, maybe in the world. It will produce around 50,000 metric tonnes of ethanol. As of now, this plant is mechanically complete. We have started the commissioning activities but it's a gradual process. This is the first time it is being tried anywhere in the world to produce ethanol from bamboo. We expect some engineering and teething problems. So, to stabilise, it will take a couple of months’ time at least—by May or June it should be fully up and running. But to get to ethanol for the trial run, it is a matter of days only.

As far as challenges are concerned, we have worked very hard on the supply chain. One of the major challenges in a biorefinery plant is the feedstock aggregation and feedstock logistics. So we have gone for an aggregation model. The chipping of the bamboo will take place in villages. We have appointed 25 local-level entrepreneurs who will chip bamboo. Chipping removes excess water. We are also trying to replenish whatever bamboo that we are going to harvest. We have collaborated with a startup company for the supply of bamboo saplings.

What are your net-zero plans and how do you plan to achieve those targets?

We have already announced that we will target to achieve net-zero by 2038. We are setting up a biorefinery. Second, we have ordered for a 2.4 ktpa (kilo tonnes per annum) electrolyser for green hydrogen. A major source of carbon dioxide emission in a refinery is the hydrogen plant. Therefore, if you can somehow do greening of that process, then you will definitely achieve net-zero that way. Going forward, we also plan to capture residual carbon dioxide either through sequestration or valorising carbon. You will see that we also embark into some chemicals which will not emit carbon dioxide during use. So we are targeting these Scope 3 emissions (arising from activities not directly attributable to NRL) also.

What would be the investments required for net-zero targets?

It will depend upon what project we finally take. We think it will take around Rs 17,000 crore. As we go along, some of the currently identified project can get replaced by other smart projects, you have to keep on revisiting the strategy based on the available knowledge and technology.

As the story unfolds, we will look for alternatives to reduce our carbon dioxide emissions as well since we will also have to think of resource allocation for which maybe we will have to go for an IPO (initial public offering) in two years’ time.

What are the company’s plan for an IPO?

It's very preliminary right now, we have just started the groundwork. We will go for the IPO once we have these green projects planned…and have portfolio identified. By then our new refinery will be commissioned, the pipeline will be in place. Therefore, it will be a very comfortable time to go for an IPO. And once we identify the green project, I think market will reward us by subscribing to the IPO. When you go for net-zero plans, you need financial resources as well. Therefore, you need the IPO to be in place. That is one source of funding.

What is the capex planned for the coming financial year?

The current year’s capex was around Rs 8,000 crore and for the next year it will be around Rs 12,000 crore. Since we are doing the expansion, it has its own payout schedule. We will be in the third year of implementation; that is where your maximum expenditure will come before it tapers down towards the end once you are ready for completion. The maximum payout is coming next year, therefore it will be around Rs 12,000 crore.

You are providing diesel to Bhutan. Are there talks with Nepal as well for exports?

Yes, we have discussed with some private players in Nepal. We are strategically located at Siliguri, which is next door to Nepal. The way we have connected India with Bangladesh through a pipeline, our aim eventually is to get a pipeline crossing the Indo-Nepal border and deliver across the border. That will be a win-win situation for both countries. We have just opened up a very preliminary discussion with some private players. There has been news that Nepal will allow private players to import. So let us see how it goes. Actually all these initiatives will yield results when we have the expanded capacity.

Who would the refinery serve?

It is always our endeavour to serve domestic customers first and only export what remains as a surplus. From our total supply, 85 percent is domestic offload, because the eastern part of the country has been witnessing double-digit growth over the last decade. Bihar, West Bengal, Orissa and Assam, all these places are growing in double digits because there was hardly any growth 20 years back. So they are trying to catch up, and we are the beneficiary of the enhanced consumption in these places.

Since we are strategically located to serve nearby nations like Bangladesh, there is a huge trade advantage both for Bangladesh and us. We are planning to extend the Siliguri-Parbatipur pipeline (which connects the Siliguri in West Bengal to the town in Bangladesh) to areas like Rajshahi (also in Bangladesh). In Myanmar, we are looking very closely at the political situation and once the situation stabilises, we will definitely relook at the area. We will be very competitive in the Sagaing province (in central Myanmar) which is a very under-serviced area but has a population of around 30 lakh.

Apart from that, whatever supply will come, it will travel to Siliguri and within a particular distance, things will get consumed. There is a serious thought to extend the pipeline by OIL. They have an ROU (right of use) existing up to Barauni (Bihar); we would like to extend the pipeline to places like Durgapur (West Bengal), Bokaro (Jharkhand) and Muzaffarpur (Bihar).

(This copy was revised to correct the date of refinery commissioning to December 2025, which was by mistake mentioned as December 2024.)