Indian Oil Corp., or IOC, has unveiled refinery diversification plans that will witness the start of a hydrogen dispensing facility at its Gujarat refinery and more downstream products, as it aims to prepare for a future catering to growing demand for both oil and cleaner forms of energy.

The move is part of the state-owned company’s wider initiative to embark on a strategic growth path that will aim to maintain focus on its core refining and fuel marketing businesses, while making bigger inroads into petrochemicals, hydrogen and electric mobility in the next 10 years.

IOC said the hydrogen dispensing facility will aim to fuel hydrogen buses plying between Vadodara and Kevadia, as well as Sabarmati Ashram.

The comments from IOC come after Indian Prime Minister Narendra Modi’s announcement over the weekend that a project is underway to develop Kevadia in the western state of Gujarat as an electric vehicle city.

“There is a fresh momentum for scaling up hydrogen use across sectors globally. Our refineries already have hydrogen generation units, and in fact, refineries present a very attractive case for acting as the hydrogen production and supply centers,” IOC chairman S.M. Vaidya told S&P Global Platts.

Wider products footprint

Vaidya recently said IOC was carving out its expansion path keeping in mind the anticipated slowdown in transportation fuels demand that would come in a decade or two.

“The high demand growth trajectory for Indian petrochemicals demand coupled with the high and growing imports of petrochemicals further strengthen the case for this in the Indian context,” Vaidya said.

Earlier in the week started June 6, IOC signed an agreement with the Gujarat state government to set up a petrochemicals and lubricants integration project as well as an acrylics and oxo alcohols project at IOC’s Gujarat refinery.

The projects will strengthen IOC’s readiness for venturing into petrochemical projects like PVC, styrene, acrylonitrile, polymethyl methacrylate and ethylene oxide in future, the company said.

“There is consensus across the board that petrochemicals integration is the way forward for the refining sector. Current refinery expansions and new capacity additions are expected to improve petrochemical feedstock availability in future,” Vaidya said.

The other infrastructure project planned under the agreement with the Gujarat government is a new flare system at the Gujarat refinery.

“Today, Gujarat is charting a new path of prosperity. To power that journey, IOC’s Gujarat refinery is now poised to grow to 18 million mt/year capacity,” Vaidya said.

Vaidya said the pandemic would not alter India’s robust long-term energy demand fundamentals despite creating short-term hurdles, making it imperative to pursue refining expansion as well as an expand footprint in CNG, LNG, biodiesel and ethanol.

Crude-to-chemicals

IOC is also looking at crude-to-chemicals, which is a technology frontier to capture the potential in petrochemicals demand, although it comes with high capital expenditures, Vaidya said.

In addition, IOC has undertaken a series of initiatives in the hydrogen sector.

“Hydrogen is the fuel of the future. IOC plans to set up several hydrogen production units on pilot basis,” Vaidya said.

Last year, IOC inaugurated its hydrogen-spiked CNG, or H-CNG, plant in the Indian capital while the Petroleum Ministry launched trial runs of buses using H-CNG as fuel.

To produce H-CNG, the entire CNG of a station passes through this new reforming unit and part of the methane gets converted into hydrogen, with the outlet product having 17%-18% hydrogen. IOC officials said emission levels would come down substantially for vehicles using H-CNG as fuel.

H-CNG blends can be produced directly from CNG, bypassing the energy-intensive electrolysis process and high-pressure blending costs. The flexible process allows the production of H-CNG on-site, in less severe conditions and under low pressure, IOC said, adding that the cost of H-CNG production by the above process would be about 22% cheaper than conventional physical blending.

Within liquid fuels, Vaidya expects that IOC will be playing a big role in blending of biofuels like ethanol and biodiesel.

India has brought forward its target of blending gasoline with 20% ethanol by five years in efforts to accelerate the push toward renewables and a cleaner energy basket. Prime Minister Modi said the country will now aim to achieve the target of 20% blending by 2025, instead of 2030.

“To achieve a target of 20% ethanol blending, India will be required to increase the current pace of ethanol capacity addition by 3.5 times, which could be a challenge. However, raw material aggregation and timely investment would be key factors to be monitored,” said Vivek Sharma, senior director at CRISIL, a separately managed unit of S&P Global.

S&P Global Platts, by Sambit Mohanty, June 14, 2021