News Detail

Following is a brief for Cabinet Meeting to consider the proposal for setting up of a 9.00 MMTPA Greenfield refinery-Cum-Petrochemical Complex in Barmer District, Rajasthan.

Brief introduction of the Project

• HPCL has proposed to set  up  a 9.00   MMTPA  Greenfield Refinery-cum-Petrochemical Complex at Pachpadra Village in Barmer District, Rajasthan as a Joint Venture (JV) with Government of Rajasthan (GoR) under the name HPCL- Rajasthan Refinery Ltd. (HRRL)
• The proposed refinery will be a subsidiary of HPCL with its equity holding of 74 percent and that of GoR 26 percent.
• HPCL has signed a MoU on 14.03.2013 with GoR delineating the terms and conditions for setting up of refinery. Salient features of MoU are given here under:

1. Equity participation of GOR in the JV Company subject to a minimum of 15 percent and maximum of 26 percent.
2. Equity participation of HPCL in the JV Company subject to a minimum of 51 percent and maximum of 74 percent.
3. Interest free loan of INR 3736 crore as an incentive, every year to the JV company by GOR for a continuous period of 15 years beginning from the year in which commercial production commences at the Refinery
4. The loan will be repaid by the JV Co. in equal annual installments from the 16^th year after commercial production commences until 30^th year 
5. HPCL will have the marketing right including first right of refusal in respect of uplifting and purchase of all the products

• HPCL has also signed a Joint Venture Agreement (JVA) with GoR on 11.07.2013 on above lines

Key Features of Rajasthan Refinery Project

• The proposed refinery will process the Rajasthan crude as a well head refinery (close to the location of the oil producing facility of M/s Cairn Energy) 
• Rajasthan crude  is currently being  processed  in  refineries which  are  not specifically designed to extract maximum value out of the unique properties of the  crude oil due to their design/ configuration limitations. The   proposed Rajasthan Refinery will be designed to optimise product value from the local crude oil   
• The refinery cum petrochemical complex is proposed at Pachpadra in Barmer district and will have a crude processing capacity of 9 MMTPA 
• Various combinations of refinery processing units have been evaluated by HPCL. State-of-the-art technologies have been considered in the configuration and best combination of units for maximising the product value has been arrived at 
• The complex will produce Euro-IV/ V grade Petrol and Diesel fuels in addition to petrochemical products such as PP, PE and aromatics (Benzene, Toluene, Xylenes) 
• As per approved crude oil production profile by DGH, the oil production from the Rajasthan fields is expected to decline from the current production level of 8.2 MMTPA to about 4.29 MMTPA by 2017-18 and further to about 2.83 MMTPA by the end of the PSC period of 2020 
• The proposed complex gives maximum value while processing 100 percent Rajasthan crude. However, considering the projected availability of the Rajasthan crude, the refinery complex is to be based on 4.5 MMTPA of Rajasthan crude and 4.5 MMTPA of Arab mix crude 
• The estimated cost of the project is INR 37, 230 Crore (March 2013 basis, +/- 20 percent). The project is proposed to be funded through a mix of debt and equity in the ratio of 1.5:1 
• GRM and IRR of the project are estimated to be 15 $/bbl and 6.32 percent respectively. The economic viability of the refinery is being improved through viability gap funding by GOR to achieve HPCL's threshold IRR of 15 percent 
• To meet the HPCL threshold IRR of 15 percent, viability gap funding of INR 3736 Crore per year for 15 years starting from commercial production shall be provided by GOR 
• Project is expected to be completed within 4 years from the zero date for the project which is considered to start from the date of receipt of all statutory approvals 
• Considering financial closure of the project by December 2013, mechanical completion is expected by December 2017 
• Considering that the refinery complex produces petrochemicals, there will be huge potential for developing downstream industries and other service sectors in and around the region. Polypropylene, Polyethylene and the other aromatics products from the refinery complex could result in various downstream industries such as plastics, textile and automobiles, resins, solvents

Indian Refining scenario/need for a new refinery by HPCL

• The total refining capacity in the country as on 01.04.2013 is 215.066 MMTPA (Million Metric Tonne per Annum), out of which 120.066 MMTPA is in the public sector, 15.00 MMTPA in joint venture and the balance 80.00 MMTPA is in the private sector. Against this, domestic consumption of products is estimated at 155.4 MMTPA in 2012-13 (Provisional) while another 60 MMTPA approximately is exported from the country
• The demand for petroleum products is estimated to grow at a Compound Annual Growth Rate (CAGR) of 4.8 percent during 12^th Year Plan Period and trend will continue during the 13^th Five Year Plan. Demand for petroleum products would increase to 244.96 MMT with the CAGR of 5.6 percent
• In view of the demand projections for 2016-17 and onwards till 2021-22, creation of the additional refining capacity by HPCL would help the company meet the shortfall between their projected sales requirements (42  MMTPA) and their installed refining capacity (24 MMTPA)
• Moreover, additional refining capacity would also contribute towards generating employment, enabling industrialisation of a backward area and help in promoting India as a refining hub in the Asian region