RIL looks to expand refining capacity

Mukesh Ambani-promoted Reliance Industries Ltd (RIL) plans to expand its refining capacity at Jamnagar in Gujarat.

"Our chairman (Mukesh Ambani) has said Reliance will be doubling profit. Downstream (oil refining and marketing) are very much part of this plan, " Tony Fountain, CEO (refining and marketing) at RIL, told reporters at the ongoing Petrotech 2012. RIL owns and operates a 33-million tonne domestic tariff area refinery that sells the bulk of its produce in the domestic market. It also operates a 29 million-tonne refinery in a special economic zone in Gujarat, dedicated to exports.

"We are very much looking at all sorts of plans,” he said. "We are looking at options at both DTA and SEZ refineries.” However, he did not share details of the refining capex.

 

At its annual general meeting (AGM) in June this year, Ambani said the company aims to invest Rs 100,000 crore in its petrochemical, oil and gas business along with new sectors of telecom and retail business to double profit. However, he did not speak on refinery expansion.

RIL is setting up a $4-billion petroleum coke gasification project that will replace the expensive LNG as fuel at its refineries. "We are adding significant project of petroleum coke gasification,” said Fountain.

India’s oil refining capacity is expected to rise 24 per cent to about 267 million tonnes by 2015-16 as both public and private sector refiners have lined up expansions. The country has 25 oil refineries with a crude oil processing capacity of 215.066 million tonnes. This will increase to 264.966 million tonnes by 2015-16, Minister of State for Petroleum and Natural Gas R P N Singh had said in a written reply to a question in the Lok Sabha in August this year.

Batting for a level-playing field in retail fuel business, Fountain said that the government should either free diesel pricing from its control or provide subsidy equivalent to private firms, too.

He said the company continues to keep most of its 1,452 petrol pumps closed in absence of a level-playing field with its main public sector competition.

While the government has freed petrol pricing, diesel continues to be sold at highly subsidised rates. “We are not selling diesel anywhere. Only a few outlets are operating (for petrol sales),” he said. “We were 13 per cent of the market (before the outlets were shut down as it could not compete with public sector).”

“We are ready to reopen (petrol pumps) if the fiscal environment is right,” he said.

RIL ranks second in the domestic refining sector after IndianOil with a capacity of 65.7 million tonnes.