New Delhi, March 28: Indian Oil Corporation will invest Rs 3,500 crore in three of its refineries, including the one in Haldia.

IOC will install a hydrocracker unit at its Haldia refinery, which will improve distillate yields and profitability of the unit. Hydrocracker is a secondary processing unit through which the crude oil passes after it has been refined once in the primary vacuum distillation unit. Renewed processing through the hydrocracker unit yields more light and middle distillates such as petrol, diesel and kerosene from the same quantity of crude.

Approved in November 2005, the project will be completed by April 2009 at a cost of Rs 1,867 crore.

Petroleum ministry sources said investments would also be made to increase the refining capacity of IOC's Panipat plant from 12 million tonnes (mt) to 15 mt, upgrade the quality of diesel at the Koyali refinery in Gujarat and complete the product pipeline between Koyali and Ratlam.

These projects are part of Indian Oil’s commitments in the memorandum of understanding (MoU) that the navratna signed with the ministry of petroleum and natural gas.

The public sector oil retailer plans to develop Panipat into “a strategic petroleum hub” for the north by increasing the capacity of its refinery to 15 mt, sources said.

IOC has already doubled the capacity of the Panipat refinery from 6 mt to 12 mt at an investment of Rs 4,365 crore.

The oil major now plans to raise the capacity of the refinery by another 3 mt through low cost debottlenecking at an investment of around Rs 300 crore.

Sources said upgrading the facilities at Panipat is part of the plan to enhance the energy security of the country. The refinery is strategically located to meet the needs of the defence forces deployed in Punjab, Rajasthan and Jammu & Kashmir under the Northern Command and Western Command.

The refinery is also in close proximity of Punjab, Haryana and Delhi, which generate huge demand for petroleum products.

Senior Indian Oil officials feel the Fortune 500 company lost out earlier when M. A. Pathan was chairman. Pathan had signed a 'lop-sided' agreement to market the products of the Reliance refinery instead of creating more capacity for IOC. As a result the company's share in the refining business had gone down during his tenure. However, to be fair to Pathan he did not have the backing of the petroleum minister at that time.