Oil refining is on fire in India with $100 billion investments

India’s oil refining sector is red hot ongoing investments total $100 billion
By Ninad D. Sheth

Oil refining is the next big economic thing out of India.

The sector has seen $80 billion investments in the last five years.

$50 billion investments are planned for the next five years.

Although India does not have much oil, it is the world’s fourth largest refiner of the black gold!!

Refining turns crude oil into usable and profitable commodities like petroleum!

Most of the stuff refined is for domestic consumption but amazingly oil deficit India exports a lot of petroleum, petro chemicals and diesel.

In 2016 INDIA exported 61 million metric tons  of petroleum!!

These massive investments point to the fact that despite the solar push and alternative energy focus oil will be the mainstay till at least 2070.

Battery solar wind and others could yet prove these investments costly legacy ones!

That in fact helps India, as oil giants hedge with alternative energy they continue pumping money into oil thus the boom in refining.

India is the world's 5th biggest Oil refinery player and Saudi Aramco just but $20 billion in Reliance a huge vote of confidence !

 The top 10 oil refining countries account for more than 58% of the world's total refinery capacity. The United States is the biggest refiner in the world followed by China, Russia, Japan and India.

Oil is everywhere 

It’s in your       

Dress

Golf

Faucets

Anticeptics

 TV

Eyeglasses

Aspirin

Shampoo

Heart valves

Cold creams

even toothpaste

From Russia with OILOVE

Rosneft, a Russian oil giant payed $13 billion along with Trafigura a Russian fund for ESSAR an Indian oil company.

The ESSAR group once India’s third largest conglomerate was sorta forced to sell this profitable crown jewel by the Modi government which wanted it to pay back the $20 billion debt.

ESSAR has repaid about half of that through this deal alone, though $10 odd billion still remain which at 24 % interest is a hefty outstanding!!

In a bad year for FDI 2017 the Rosneft deal constituted 40 % of all FDI in India.

The deal makes Russians owners of the 400,000 barrels per day (bpd) Vadinar refinery in western Gujarat, a port and 5000 petrol pumps.

Reliance refining plans have taken off !!

Reliance which has a capacity to refine 60 million tons per year is finishing a $10 billion push to up its refining capacity by 40% come 2030.

$10 billion is 66000 crores, lots of money, that.

Reliance has one of the fattest refinery margins in the world at $11 to a barrel of crude.

ARAMCO comes to town !!

Saudi Aramco is the world’s largest oil company.

It has teamed up with Abu Dhabi Oil Company to invest $44billion for 50% in a 60 million-ton/year integrated refining and petrochemical complex in Maharashtra.

This will be the largest ever foreign investment in India.

Gasoline and diesel will be made here meeting India’s equivalent to Euro 6 fuel-efficiency standards

This redefines BIG - the mega refinery will provide feed stock for an integrated petrochemical complex equipped to produce about 18 million ton per year of chemical products.

Kuwait can’t wait!

Kuwait Petroleum International (KPI) is in talks to buy 24 percent of the Bina joint venture refinery in central India.

The 120,000-bpd Bina plant is operated by Bharat Oman Refineries Ltd (BORL), a 50-50 JV between Oman Oil Co and state-run Bharat Petroleum Corp.

The investment would be about $7 billion in this venture.

This is why India’s downstream hydrocarbon sector is a big draw

India is the world’s third largest oil consumer after China and the USA

India is the fourth largest refiner of oil in the world

The Reliance refinery is the largest Greenfield refinery in the world

Oil majors want to go beyond selling crude oil to India 

They want value addition and want to sell petroleum, diesel aviation fuels and petro chemicals

Dharmendra pradhan, India’s oil minister was quoted in the media recently saying, "Oil refining capacity in the country stands at over 247 million ton at present and demand for petro products, which is rising rapidly, will touch 600 million ton by the year 2040,"

Why Oil Refining matters to india

It increases India’s energy security when crude majors also invest downstream they have a greater stake in continued supply to the Indian energy sector.

The $100 billion investment over the next decade and now under way will create 9.5 lakh jobs directly in this sector.

India has some fine petroleum universities that are great for a degree.

Finally, they bring in research and innovation in the business for better products helping the ecosystem.