EXPANSION PROJECTS PLOUGH

Ahead

GlobalData’s report identifies the two major expansion projects that are expected to start operations by 2024 as the Vadinar CDU Expansion and the Panipat CDU Expansion . The Vadinar CDU Expansion has a capacity of 515,000 barrels per day, or bpd. Nayara Energy Ltd is the operator while Rosneft Oil Co and Trafigura Group Pte hold 49.1 percent and 24.1 percent of equity, respectively.

The Panipat CDU expansion project stands second with a refinery capacity of 200,000 bpd. Indian Oil Corp Ltd is the operator as well as 100 percent equity holder of this project, which is expected to start operations in 2024.

GlobalData’s Oil & Gas team’s Project Manager Pradeep Shukla told Breakbulk that India has emerged as one of the world’s fastest growing major economies, consistently recording a high economic growth rate over the past few years, and is expected to be among the top three economies globally in the next 10 to 15 years. “As the country’s economic growth is closely tied to its energy demand, oil demand in the country is expected to rise until 2040.

According to the World Energy Outlook 2022 , the country’s oil demand is projected to grow by more than 40 percent in 2030 compared with 2021 levels and is unlikely to peak before 2040,” Shukla said.

“While the Indian government has been investing in various alternate and clean energy projects, factors such as economic growth, rapid industrialization and urbanization will continue to drive petrochemical and petroleum products demand in the country over the next two decades. However, in the longer run, India’s net zero emission target 2070 could have a significant impact on the development of oil and gas projects in the country as India moves towards a low-carbon economy.”

Subsequent to the report’s publication, other projects have been added to the expansion initiatives. “Apart from the expansion projects at Vadinar and Panipat refineries,” Shukla said, “another key project is the Visakhapatnam refinery expansion project.

“The Visakhapatnam refinery, owned and operated by Hindustan Petroleum Corporation Limited, is undergoing an expansion cum modernization project to increase its processing capacity from 166,000 bpd to 300,000 bpd by 2023. The Visakh refinery modernization project would boost the overall processing capacity, improve the refinery’s conversion efficiency and produce Bharat stage emission standards VI compliant fuels.”

Phased Transition To Cleaner Fuels

J M Baxi Heavy’s President and Chief of Business Sameer Parikh told Breakbulk that it is clear that India is committed to achieving net zero emissions in the future and is prioritizing a phased transition to cleaner fuels. “However,” he clarified, “given India’s energy needs to sustain its robust growth trajectory, there will be a gradual and steady transition away from nonrenewable energy before it picks up fully.”

Parikh pointed out that India’s oil consumption is forecast to rise from 5.2 million bpd in 2022 to 7.0 million bpd in 2030. Indian state refiners are set to invest 2 trillion rupees (US$26.96 billion) to boost oil refining capacity by 20 percent in Asia’s third-largest economy by 2025. India’s refining capacity of about 251 million tonnes a year in 2022 is expected to climb to 298 million tonnes a year by 2025.

As such, “demand for gasoil will rise by an average 5.3 percent per year through the 2025 fiscal year and by an average 4.5 percent through 2030. India would continue to rely mainly on road transport to move cargo around the country, while the number of passenger cars would steadily increase in the coming years with rising vehicle ownership,” Parikh said.

While Indian oil demand will primarily stem from transportation fuels, it is the petrochemical sector that will dominate growth over the medium term. “Total ethane, LPG and naphtha demand is expected to grow,” Parikh said. “India is likely to start the operations of 281 petrochemicals projects by 2025, accounting for nearly 34 percent of the total upcoming petrochemicals project starts in Asia by 2025. India is one of the largest consumers of petrochemicals globally. It is one of the fastest growing industries in the Indian economy as it supports other growing industries such as construction, pharmaceuticals, and so on.

“While the share of renewables, including solar, wind and natural gas, is likely to increase in the next 10 years, absolute oil demand would still rise strongly over the next decade.”

Furthermore, Parikh pointed out that as nuclear and solar energy options are being studied, project logistics companies will need to keep a close watch on the developments taking place, saying that there will be a need to pivot and respond to changes with agility.

Project Cargo Boom

In Parikh’s view, all of this bodes well for the project cargo transport and heavy-lift sectors. “India has emerged as one of the world’s largest consumers of both petrochemicals and petroleum products, and therefore continues to expand its refining capacity to meet this ever-growing demand. With that, we expect there will be a demand for specialized project and heavy logistics transportation.”