India’s biggest oil company plans to build $8.3 billion refinery as fuel demand rises

State-owned Oil and Natural Gas Corporation (ONGC), India’s largest oil and gas explorer, is evaluating plans for an $8.3 billion refinery plus petrochemical project in India’s most populous state to take advantage of increasing demand for fuel, sources with knowledge. Bloomberg said about the matter.

ONGC is considering siting the refinery project estimated to cost $8.3 billion (700 billion Indian rupees) in the northern Indian state of Uttar Pradesh. With 241 million inhabitants, Uttar Pradesh is the most populous state in the country.

The refinery and petrochemical complex is expected to be able to produce 9 million tons per year of fuels and petrochemicals, according to Bloomberg sources.

ONGC has discussed with state-controlled refiner Bharat Petroleum Corporation Ltd (BPCL) the idea of ​​building the refinery in Prayagraj, the state’s most populous district, sources told Bloomberg.

Separately, BPCL is said to be in talks with major local banks to secure a roughly $3.8 billion loan that it will use to expand capacity at one of its refineries, Bloomberg reported last week, citing sources who know the talks.

BPCL is looking to raise about $3.8 billion (320 billion Indian rupees) from lenders to boost capacity at its Bina refinery in the central Indian state of Madhya Pradesh.

India has said it expects to increase its refining capacity by about 1.12 million barrels per day (bpd) each year until 2028 as it seeks to meet growing demand for the fuel. India’s total refining capacity is expected to grow by 22% in five years from the current 254 million metric tons per year, which is equal to about 5.8 million bpd.

BPCL Chairman G. Krishnakumar said last week that the refiner sees demand for the fuel in India growing between 4 percent and 5 percent a year for the “foreseeable” future.

To meet the growing demand for refined petroleum products and petrochemicals, many Indian refineries are planning to expand their crude oil processing capacities and ethylene cracking units at refineries.

By Charles Kennedy for Oilprice.com

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