The Telegraph
Monday , December 3 , 2012
Since 1st March, 1999
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Plan boost for N-E refineries

Guwahati, Dec. 9: The working group for petroleum and natural gas constituted under the Planning Commission has projected that refineries of the Northeast are expected to have adequate domestic crude for achieving 100 per cent capacity utilisation at their current level of installed capacities.

Though the region’s refineries are primarily dependent on crude oil supplies from local oil fields, production of crude has been inadequate to meet requirements of the four units in the region. With government initiative, 1.50 MMTPA of Ravva crude from Andhra Pradesh is being allocated since 2003-04 to augment the pool of crude in the region. The pool available for processing at the four refineries in the region in 2010-11 was 6.03 MMT. In 2011-12, the ministry of petroleum and natural gas has projected the crude oil availability to be 6.44 MMT.

According to the working group, if the crude oil production in the region increases as expected in the Twelfth Plan period, the capacity of local refineries will be stretched to the limit. In fact, by the end of the Twelfth Plan, the refining capacity for the country, which was 193.39 MMTPA in 2011, is projected to increase to 310.886 MMTPA.

“However in the event of non-materialisation of Ravva crude in 2016-17 as projected, imported crude to the extent of 0.50 MMMT would have to be processed at Bongaigaon refinery to saturate refining capacity of all NE refineries. This can be handled through the existing pipeline infrastructure,” the working group stated.

“Extra effort is being made by OIL and ONGC in production and exploration which should help the refineries in getting crude,” Numaligarh Refinery Limited managing director Dipak Chakravarty told The Telegraph.

Numaligarh Refinery Limited has found that expansion of its capabilities by 5 MMTPA can be feasible and consequently has drawn up a plan for increasing its refining capacity from 3 MMTPA to 8 MMTPA. The proposal involves construction of a new pipeline for transporting 5 MMTPA of medium/high sulphur imported crude oil from Dhamra port to Numaligarh.

According to the company, additional products generated from the refinery expansion can primarily get absorbed in then existing supply envelope of the refinery.

Part of NRL’s increased production is also envisaged to be exported to Bangladesh through Parbatipur (150 km from the NRL terminal at Siliguri) while part quantities are envisaged to be utilised for production of petrochemical grade Naptha for which adequate demand exists within the country.

Although IOC does not plan immediate expansion of its Northeast-based refineries, it is reported that the company will examine feasibility of increasing refining capacities once NRL’s proposed crude oil pipeline from Dhamra to Numaligarh gets commissioned. A token amount of Rs 10 crore is proposed to be kept by IOCL in the Twelfth Plan.

In fact, the refineries have chalked up plans for value added initiatives and other infrastructure projects in the Twelfth Plan period. Some of the projects are the Rs 577-crore wax project of NRL, wax-moulding unit at Digboi refinery, a new product terminal at Digboi refinery and Indmax unit proposed to be set up at Bongaigaon refinery.

On continuation of excise duty concessions to the refineries, the working group said the unit had been set up mostly on socio-political considerations, as even today, the Northeast demand for petroleum products is insufficient to absorb production from these refineries. “Due to limited demand, limited crude availability, locational disadvantages and social obligations, it is necessary that these refineries operate and upgrade their units so that they may eventually be in a position to run their operations economically,” it said in its report.

During the price revision last year, excise duty on high-speed diesel has been reduced from Rs 4.60 per litre to Rs 2 per litre, which has brought down the benefits to the local refineries.

The group has recommended that the excise duty concession of 50 per cent be continued and it should be increased to 100 per cent for ensuring viability. Similarly, the imposition of entry tax of 2 per cent of crude oil in Assam is impacting the refineries as it puts them at a disadvantage compared to other refineries. Assam government has also asked the Centre to help NRL.

In fact, the Twelfth Plan should be good for the region as the oil industry is proposing to invest over Rs 500 crore for capacity augmentation and conversion of existing depots into rail-fed locations. The conversion of Northeast depots into rail locations is to circumvent the frequent road closures because of landslides and other factors beyond the control of the oil industry. Plans are afoot to convert the road-fed depots at Missamari in Assam, Doimukh in Arunachal Pradesh and Sairang in Mizoram to rail-fed locations.

Major supply points at Guwahati, Betkuchi and Tinsukia are already being fed through pipeline. Pre-monsoon stocking is being undertaken for areas across the Brahmaputra.

An average cover of 40 days is available in the Northeast at primary supply points to meet growing demand of the region’s sector. In addition, product tankages at refinery locations at Digboi, Numaligarh, Bongaigaon and Guwahati are also available. Furthermore, plans are afoot to augment existing tankages to take care of growing petroleum, oil and lubricants (POL) demand in the region. About 75 TKL of new/additional tankages are planned to be added in the Northeast during the Twelfth Plan.

Regarding the LPG scenario, the industry is augmenting the bottling capacities from the present level of 304 TMTPA to about 400 TMTPA.

Meanwhile, in order to have a seamless production system, Oil and Natural Gas Corporation (ONGC), Assam Asset, has planned to set up gas-based captive power plants near its installations in Upper Assam.

A senior ONGC Assam Asset official said these gas-based captive power generation plants would have dual benefits. “As the different installations of ONGC in Upper Assam suffer from frequent power outages, these captive power plants would be kept as standbys so that there is uninterrupted production,” he said.

The gas-based power plants will add value to the cost of production as the per-unit cost of production will be much lesser and the cost of production will also be lessened.

“Moreover, ONGC produces a surplus of gas which can be utilised in producing our own electricity. Not only would the power plants be on standby, they could also be used when there are voltage fluctuations in ASEB power supply. This will also aid in keeping in good working order the large number of sophisticated machinery used by the company,” the official said.

He said two such plants were already operating on an experimental basis at Geleky and Rudrasagar in Sivasagar district and permission for about 35 more installations had been sought from the board of directors.

Regarding the need for so many plants, the official said that ONGC operations in Assam were unique in the sense that installations by this Navratna company were scattered in different places and at large distances from each other. “If we put up only one or two gas-based power plants, the cost would escalate in laying of pipelines as well as getting right of way from tea gardens and villages and agricultural land,” the official said.

For instance, a plant set up in Lakwa in Sivasagar district would be too far to supply electricity in Titabar, where ONGC has a group gathering station. ONGC installations include both producing and crude processing units.