Guwahati: A major challenge for Numaligarh Refinery Ltd (NRL) lies in improving operational availability of its refinery so that capacity utilisation and production can be increased to take advantage of the growing market demand, says the company's 2017-18 annual report.

The report says a Rs 22,594-crore expansion proposal is under active consideration of the ministry of petroleum and natural gas. "Once this project is approved, we expect major changes in the entire organisation as this will be the major investment of the company as well as in the oil industry of the Northeast," it says.

The project includes construction of two cross-country pipelines - a 1,398km-long crude oil pipeline of 8 million metric tonne per annum (MMTPA) capacity from Paradip in Odisha to Numaligarh in Assam for transporting imported crude oil to the refinery. The other one is a product pipeline, 650km in length and of 6 MMTPA capacity from Numaligarh to Siliguri for evacuation of product.

It says the outlook for 2018-19 continues to be positive with growing demand of petroleum products in the NRL's supply zone. Consumption of petroleum products in the Northeast has seen a high growth rate of around 16 per cent for motor spirit and 9 per cent for high-speed diesel.

Total consumption of petroleum products in the region reached 3.95 million tonnes in 2017-18, registering a growth of 12 per cent over previous year's 3.52 million tonnes.

"There is an opportunity to export products to neighbouring countries like Bangladesh and Myanmar," the report says.

In 2017-18, the NRL exported 25,000 tonnes of gas oil to Bangladesh by rail from Siliguri and 30 tonnes high-speed diesel to Myanmar by road via Moreh-Tamu border.

"India's wax demand continues to be dependent on imports by around 50 per cent. There is an opportunity for the NRL to substitute imported wax and increase market share," it says.

The implementation of India Bangladesh Friendship Pipeline from Siliguri to Parbatipur (Bangladesh) is expected to start shortly. The government-to-government agreement between India and Bangladesh has been signed, it says.

The project will be implemented with grant-in-aid of Rs 285 crore from the Centre for the Bangladesh portion of the pipeline for which an agreement between the NRL and the ministry of external affairs has been signed on fund transfer modalities. The total investment in the pipeline will be Rs 346 crore.

The major weakness of the NRL is its sub-economic refinery size at 3.0 million MMTPA, the report says.

Coupled with this, the logistical bottlenecks for importing limited quantity of crude oil to saturate existing refining capacity results in relatively higher operating cost per unit of crude processed.