BPCL eyes 50 mt refining capacity, says CMD G. Krishnakumar

The proposed refinery is expected to have an annual refining capacity of nine million tonnes. 

Krishnakumar added that India’s third-largest refiner is already working on the expansion of its existing refineries at Madhya Pradesh’s Bina and Kerala’s Kochi. India’s current refining capacity is 250 mt per annum, of which BPCL accounts for 35 mt.

Earlier in January, the Andhra Pradesh state cabinet approved the proposal for setting up a petroleum refinery project by BPCL at Ramayapatnam in Nellore district.

“Overall, we may get about 50 million metric tonne capacity when we finish the Andhra Pradesh project, roughly (in the range of) 50-52 mt. From 35 mt, it will go up to 50-52 mt,” the CMD said.

The company expects to complete the final investment decision (FID) by the end of 2025 after the pre-project activities, including feasibility study, environmental impact assessment, and land acquisition. The board of directors of the company in December approved the commencement of pre-project activities that would incur an estimated cost of ₹6,100 crore.

Although the company has yet to decide on the investment amount, it is estimated that it would be India’s costliest refinery project, with an estimated cost of ₹95,000-97,000 crore.

Speaking to reporters after the state cabinet’s approval, K. Parthasarathy, Andhra Pradesh’s information and public relations minister, said the refinery would be set up with an investment of ₹96,862 crore. 

Vetsa Rama Krishna Gupta, director (finance) at BPCL, also said in an analyst call on 24 January that although FID is expected to be completed by the end of 2025, the current projection is around ₹95,000 crore.

“(In the case of ) Andhra Pradesh refinery, we have not yet reached the FID stage. Pre-project activity is there. So, it may take another nine months to one year to reach the FID stage. That point in time, we will get the clarity of the overall capex numbers,” Gupta told Mint.

Strong demand

The expansion in refining capacity comes at a time when the domestic petroleum demand continues to grow at a robust pace and is expected to grow at the fastest pace globally, while the growth in other countries is seen tapering down.

India’s petroleum goods production is projected to reach 252.9 mt in the next fiscal year (FY26), according to data from the Petroleum Planning and Analysis Cell. This is 4.65% higher than the 241.8 mt estimated for 2024-25, driven by key transport fuels petrol and diesel.

The state-run OMC-cum-refiner already has expansion plans for its Bina Refinery in Madhya Pradesh and Kochi Refinery in Kerala, as well as plans to establish petrochemical facilities there.

“Bina and Kochi petchem projects have been approved. There is a creeping expansion in Bina as well, and we are looking at creeping expansion at the Mumbai refinery. Right now the outlay for Kochi and Bina is about ₹55,000 crore, plus there is another creeping expansion of about ₹5,000 crore,” Krishnakumar told in the interview.

The company has major expansion plans in line with its vision to become major player in India’s petrochemical sector, as the government is looking at positioning the country as hub to meet the global petrochemical demand in years ahead.

The demand for petrochemicals is expected to grow globally even if the demand for petrol and diesel subdues amid the transition to electric mobility. Petrochemical products include plastics, fertilizers, solvents, drugs, pesticides, synthetic fibres and rubbers, paints and insulating materials, among others.

The demand for chemicals is predicted to nearly triple and the petrochemicals industry in India may reach $1 trillion by 2040, according to an EY report released in August 2024.