Oil giants urged to use local steel in new projects
Mail Today, Delhi   17-Jun-2020

The government has asked domestic oil and gas companies to raise the share of domestically manufactured steel they use in future infrastructure projects worth thousands of crores to reduce the country's dependence on imports, spur economic growth and create jobs.

The move forms part of the Narendra Modi government's push for local manufacturing to revive the economy, which is likely to contract by about 5% during the current fiscal year.

Union Minister for Steel and Oil Dharmendra Pradhan on Tuesday urged officials from the two sectors to prepare a roadmap to boost the oil and gas industry's share of domestic steel consumption.

Speaking at a webinar on 'Atmanirbhar Bharat: Fostering Domestic Steel Usage in Oil & Gas Sector', Pradhan said construction of a new 60 million tonnes a year west coast refinery, which is crucial to the capacity doubling plan, will start soon. Our refining capacity will increase from about 250 million tonnes per annum now to 450500 million tonnes in the next 10 years, he said.

India, the world's third-biggest oil importer and consumer, plans to invest about $160 billion by 2025-26 in expanding refining capacity, building gas infrastructure and ramping up exploration and production.

State-run Engineers India Ltd anticipates India's oil and gas sector will consume 50 million tonnes of steel in the next 15 years.

The country is the world's second-biggest producer of the metal but relies on costly overseas purchases for some highend products.

"Domestic players should rise to the occasion so that cost does not escalate in our efforts to promote localization of the supply chain," Pradhan said at the webinar.

Indian Oil Corp, the country's top crude oil refiner, said on Tuesday it aims to procure Rs 16, 150 crore worth of local steel in the next three years to expand refining capacity and build gas infrastructure. The company plans to procure 400,000 tonnes of steel, plus 5,500 tonnes of plates for tank maintenance, IOC chairman Sanjiv Singh said. However, he said it has to import some varieties of steel that local firms rarely make at competitive rates.

Steel Authority of India Chairman Anil Kumar Chaudhary said while the cost of producing specialised grades was higher, economies of scale meant that a rise in orders would bring it down. "We can develop any kind of steel," he said.

Oil Minister Dharmendra Pradhan said the oil refining capacity addition will be both brownfield and greenfield.