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Indian Oil Corp. Ltd (IOC) plans to fully operationalize its Paradip refinery by early next month, aiming to reach its full capacity of 15 million tonnes per annum (mtpa) during the next financial year. IOC, the nation’s largest oil refiner, reported a net loss of Rs.329 crore in the July-September quarter on Tuesday.
Built at a cost of Rs.34,555 crore, the Paradip refinery is among the most advanced refineries in the world, with the ability to process heavy crude oil with a high sulphur content. The refinery is an integral part of India’s strategy to source heavy crude from Latin America, refine it in India, and ship the product back to those markets. This will put IOC in direct competition with Mukesh Ambani-led Reliance Industries Ltd (RIL).
“We commissioned the crude unit in April, and subsequently, a large number of units has been commissioned. We are hopeful that by the end of this month or early next month, we should be able to operate the refinery. A lot of teething problems have been resolved. It will be fully commissioned in a month or so,” IOC director (refineries) Sanjiv Singh told journalists after the company reported the September quarter results.
On a query about the output expected from the Paradip refinery, Singh said IOC was targeting around four million tonne (MT) this financial year but it would probably would be somewhere around 3 MT. “Traditionally, the plans for refinery capacity are 60% in first year, 90% in second year and 100% in third year. But seeing the requirement and capability of the refinery, we will definitely target 100% in 2016-17,” said Singh.
On Tuesday, IOC reported a net loss of Rs.329 crore in the quarter ended 30 September on account of inventory and foreign exchange losses as well as low refining margins, compared to a net loss of Rs.898.46 crore in the same period a year ago.
“On physical parameters, we have done extremely well. On sales, we have done well. Capacity utilisation has been good. What has impacted is inventory losses,” said IOC chairman B. Ashok. IOC earned just 90 cents on turning every barrel of crude oil into fuel as compared to a negative gross refining margin of $1.95 per barrel.
India, the world’s fourth-largest energy consumer, is recalibrating its crude sourcing strategy and wants to become a preferred refining hub. India’s refining capacity increased from 62 mtpa in 1998 to around 215 mtpa now. The country’s refining capacity is expected to reach 307.36 mtpa by 2017. However, the charge has been primarily led by private sector refiners such as RIL (60 mtpa) and Essar Group (20 mtpa). IOC controls 10 of India’s 22 refineries with a total capacity of 65.7 mtpa.
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