As India is set to become the world’s largest oil demand growth driver in the coming years, Indian state-owned refiner Chennai Petroleum Corporation Limited (CPCL) plans to commission a new refinery two years later than initially planned by 2025.   

CPCL, a unit of Indian Oil Corporation (IOC), now aims to complete the construction of a 180,000-barrels-per-day refinery by the end of 2027, Reuters quoted CPCL’s head of finance Rohit Kumar Agrawala as saying on Monday.

Chennai Petroleum plans to build the refinery in the southern state of Tamil Nadu, where the refiner already has a 235,000-bpd refinery, Manali, at North Chennai.

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As the company is now changing the capital structure of the joint venture responsible for the new refinery development, Chennai Petroleum will have to wait for government approval for the new capital structure, Agrawala told Reuters.

After approval is obtained, Chennai Petroleum will need 36 months to complete the construction and three months for commissioning the refinery, Agrawala said.

The cost estimate for the new refinery has risen to some $4.36 billion (364 billion Indian rupees), up from previously expected costs of about $3.52 billion (294 billion rupees), Chennai Petroleum’s finance head said.

India plans to add significant refining capacity this decade as its petroleum consumption will continue to grow and is expected to become the single biggest driver of global oil demand growth.

High GDP growth, industrialization, urbanization, and a rising number of middle class in India are all expected to shift the key oil demand growth driver from China onto India.   

India should add 1.12 million bpd to its current total each year until 2028, a junior oil minister told India’s parliament at the end of last year.

“India will become the largest source of global oil demand growth between now and 2030,” the International Energy Agency (IEA) said in a report on the Indian oil market earlier this year.

By Oilprice.com / Charles Kennedy Apr 29, 2024