State Signs on to IOCL Refinery Project

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Indian Oil Corp. Ltd. signed a memorandum of understanding Monday with the government of the state of Gujarat for a project that will expand the company’s refinery in Vadodara and integrate petrochemicals production.

The project, estimated to cost Rs 24,000 crore (Rs 240 billion, or U.S. $3.3 billion) was previously announced by IOCL. It includes construction of several new units, including a base oil plant with capacity to make 235,000 metric tons of API Group II and III base stocks.

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The company has not yet disclosed a schedule for the base oil plant or the overall project.

IOCL said the project is part of an effort to increase its output of higher-margin petroleum products. In addition to base oil, it will introduce acrylics and oxo alcohols to the portfolio of materials produced at Vadodara. A statement issued Monday said the project will also position the refinery for future introduction of petrochemicals such as polyvinyl chloride, styrene, acrylonitrile, poly-methyl methacrylate and ethylene oxide in future. Currently India relies mostly on imports to meet its demand for those materials.

India is one of the world’s largest importers of base oils, but several base oil plants are now under development. IOCL also plans to build Group III plants at fuels refineries in Panipat, in the northern state of Haryana, and in Haldia, in the eastern state of West Bengal. The latter refinery already operates a Group II plant.

Bharat Petroleum has said it will expand its Group II base oil plant in Mumbai, though it has not indicated whether the additional capacity will be Group II or III.

The project that the Vadodara refinery will increase its overall crude oil throughput capacity from 13.7 million t/y to 18 million t/y.

The memorandum of understanding with Gujarat did not specify the government’s form of support for the project. In addition to the overall project, it covers several infrastructure elements, including a pipeline, a tanker truck loading facility for linear alkyl benzene and a station to dispense hydrogen fuel for buses – the first facility of its kind in the country.

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