IOC mulls deferring expansion projects to sync them with demand
Statesman, Delhi   28-Sep-2020

India's top oil firm IOC is looking to defer some of its refinery expansion projects to sync them with changes in demand patterns resulting from the pandemic and a gradual rise in the use of cleaner fuels, its chairman Shrikant Madhav Vaidya said. In an interview with , Vaidya said oil demand in India has not been destructed but only deferred and Indian Oil Corp (IOC) was also betting big on petrochemicals to hedge fuel shocks.

Liquid fuels such as petrol and diesel will continue to play a dominant role in the country in the next two decades despite a creeping increase in the use of electric vehicles (EVs) and cleaner fuels like gas.

"You see the pie is also increasing. While we see EVs growing, the oil will remain a dominant fuel," he said. "Even BP in its latest world energy outlook has projected India's oil consumption to double to 10 million barrels by 2050."

In 2018, an Oil Ministry report had projected that oil refining capacity will rise to 439 million tonnes by 2030 from the current 250 million tonnes, to meet the rising fuel demand of a fast-expanding economy.

IOC, which currently owns and operates 11 out of the country's 23 refineries, had plans to double refining capacity to 150 million tonnes per annum by 2030 from 80.7 million tonnes per annum.

"I firmly believe that demand has not been destructed. It has got deferred. So the condition is such that we would like to once again assess the demand-supply. Nothing has been shelved as such but maybe deferred slightly," he said.

While the company is going ahead with the expansion of the Koyali refinery in Gujarat to 18 million tonnes from 13.7 million tonnes, the plan for raising the capacity of Panipat refinery in Haryana to 25 million tonnes from 15 million tonnes may be pushed back by a few years, he said.

IOC is also adding 3 million tonnes of capacity at Barauni refinery in Bihar as well as adding a 9 million tonnes unit at its subsidiary Chennai Petroleum Corp Ltd (CPCL).

"Panipat (expansion) will happen ultimately but it will get staggered," he said.