first_imgMumbai: Hindustan Petroleum Corporation(HPCL) is planning to invest around Rs 74,000 crore over the next five years to expand capacity. The Navaratna company plans to invest around Rs 14,900 crore in the current fiscal, chairman Mukesh Kumar Surana told shareholders after the annual general meeting here Wednesday evening. “We are focused on strengthening refining and marketing through expansion of our refining capacity, supply chain capabilities and customer reach. Also Read – Thermal coal import may surpass 200 MT this fiscal”In addition, the thrust is on creating new levers of growth by establishing a strong presence in petrochemicals, scaling up footprints in natural gas and expanding marketing overseas,” he said. The company, which owns and operates three refineries,has undertaken capacity expansion at refineries atVisakhapatnam and Mumbai. The modernisation of the Visakhapatnam refinery will enhance capacity from 8.33 million tonnes to 15 mt. The capacity of the Mumbai refinery is also being enhanced from 7.5 mt to 9.5 mt. Also Read – Food grain output seen at 140.57 mt in current fiscal on monsoon boost”On completion, these projects will enhance our profitability. We will have the capability to produce BS-VI fuels,” he added. Surana further said the 9 mt greenfield refinery-cum- petrochemical project coming up at Pachpadra in the Barmer district of Rajasthan has achieved significant progress. “Engineering activity is in progress and construction has commenced. Financial closure has also been achieved for this project. The project is being implemented at a cost of Rs 43,129 crore,” Surana said. The company is, he said, laying a thrust on pipeline network expansion. “Ongoing pipeline projects with total estimated investment of Rs 5,555 crore are in various stages of completion,” he added. HPCL, along with Indian Oil Corporation Ltd and Bharat Petroleum Corporation Ltd, incorporated a joint venture company, IHB Private Ltd, in July 2019 for the execution of the country’s longest, 2,757-km LPG pipeline project from Kandla in Gujarat to Gorakhpur in Uttar Pradesh. Last fiscal, HPCL saw its highest ever capital expenditure of Rs 12,438 crore, with some capital projects being completed while other projects under implementation. To enhance liquefied petroleum gas supply and distribution capabilities, bottling capacity of 330 tmtpa (thousand metric tonnes per annum) was added during the year at existing bottling plants. The company also commissioned a new LPG bottling plant at Warangal district in Telangana with a capacity of 60 tmtpa. The company also plans to build second-generation ethanol production facilities, and market compressed bio-gas. Its net profit for fiscal 2019 stood at Rs 6,029 crore and gross refining margins (GRM) averaged at $5.01 a barrel. Meanwhile, Hindustan Petroleum, which is a minority partner in the proposed West Coast Refinery, feels Saudi Aramco, the single largest shareholder in the 60 million tonne project, partnering with Reliance will have no impact on the now-stuck project. Mukesh Surana, the chairman of the ONGC-run HPCL, also said the work on the controversial Rs 4 trillion refinery and petrochemicals project is on track. It can be noted that the location for the project is yet to be identified after the one identified earlier in Ratnagiri was abandoned due to public and political protests last year. Speaking to reporters here late Wednesday evening after the AGM, Surana said Aramco’s decision to pick up a 20 percent consideration in Reliance’s Jamnagar refinery for $15 billion could be part of the world’s largest oil company’s strategy to secure a long-term client for its crudes. “It will not be right on my part to comment on what Aramco’s strategy is. But my understanding is that they have got the capability to do both the projects (West Coast Refinery and Reliance). So the deal that they have gone into with RIL, I don’t think it will have any apparent impact on other discussions that are going on,” Surana said. Three state-owned oil majors–Indian Oil, Bharat Petroleum and HPCL–have entered into an agreement with Saudi Aramco under which the Saudi oil major has picked up 51 percent stake in the refinery project. Aramco in turn has roped in Abu Dhabi National Oil Company as a minority partner for the 60 million tonne refinery-cum-petrochemical complex. But some analysts view Aramco going with RIL due to the massive cost escalation in the West Coast project, which has jumped by Rs 1 trillion to Rs 4 trillion and also there is no guarantee that the project will take off at all. The three state-owned companies will own 49 percent in the project, of which 25 percent will be held by IOC and the rest equally between the other two. Earlier, the project was proposed to come up at Nanar, a village in Ratnagiri district, some 400 km south of Mumbai. However, due to continued opposition from the locals as well as the ruling ally in the state, Shiv Sena, the Devendra Fadnavis-led government decided to relocate the project to another location. Fadnavis had, reportedly, recently said the new site will be in the neighbouring Raigad district, about 100 km south of the financial capital. But the location is yet to be finalized. Reliance recently announced its plan to sell 20 percent stake in its refining and petrochemicals business for $15 billion to Aramco, which would also supply 5,00,000 barrels of crude per day to the twin refineries in Jamnagar. “As far as Aramco is concerned, they will be happy to have a destination for their crude for a long-term basis and the buyers will also be happy to have a long-term arrangement for an assured source of supply. So to that extent I don’t see any contradictions in the two partnerships,” Surana said. When asked about the timeline for the West Coast project, he said, “I don’t think we can give a timeline. This refinery will take five years to be completed but the final investment destination has to be taken. “The configuration study work is in progress and multiple cases are being worked out depending on the changing demand supply situation and once that is frozen there can be a comprehensive case.” Whether the implementation of the BS-VI fuels from next April will increase the prices, he said, “all the refineries are investing for this and all refineries are hydrogen dominated units and hydrogen is a costly commodity. “There will be a cost to refineries and we would definitely like that there will compensation by way higher prices. But to what extent, we need to see,” he said.last_img

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