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Indian Oil Corp paints future refining landscape with a shade of green

Indian Oil Corp. will pursue the expansion of its refineries to meet the anticipated growth in oil demand, but many of those projects will have much lower carbon footprint because of the use of green power, the company’s chairman Shrikant Madhav Vaidya said Sept. 27.

India needs to add at least 100 million mt/year refinery capacity to its current 250 million mt annual capacity by 2030, despite the global push towards cleaner fuels, Vaidya said.
State-run refiner IOC, which caters to more than 40% of the country’s fossil fuel demand, aims to increase its use of electricity generated by renewable energy sources, as it expands its core refining capacity.

“For all refinery expansions that we are planning, normally we would have captive power plants. But we are not putting any conventional power plants for the projects. That will be one big step towards energy transition,” Vaidya said during a CEO Conversation session with Platts President Saugata Saha at the S&P Global Platts Asia Pacific Petroleum Conference.

India’s per-capita energy consumption is about one-third the global average, and the country’s fossil fuel demand is not expected to peak anytime soon, according to Vaidya.

“Unlike the West or the European nations, we still have a very robust primary energy consumption growth ahead. So, we cannot be moving away from fossil fuels so early,” Vaidya said.

India’s gasoline demand was 7%-8% above the pre-pandemic levels in September, with diesel demand recovery still catching up and lower by about 7%-8%, he said.

“The recovery now is something like a V-shaped recovery,” Vaidya said.

India’s oil demand is expected to increase by 170,000 b/d quarter-on-quarter in the third quarter, and as much as 575,000 b/d in the fourth quarter, driven by a broad-based pickup in economic activity and rising COVID-19 vaccinations, according to S&P Global Platts Analytics.

Petrochemicals, lubricants
IOC also plans to raise its petrochemicals production through 2030, while making inroads into the production of hydrogen, compressed natural gas, LNG, biodiesel and ethanol, as the demand for gasoline and diesel plateaus in India over the long term, Vaidya said.

The company aims to enhance its petrochemical integration to 15% of petrochemicals intensity index, or PII, by 2030, Vaidya said.

“Our PII is now abysmally low — about 4%-4.5%. We are conscious of the fact that this needs to go up because India is a big importer of petrochemicals and that needs to stop. We are also adding more lubricants to our product portfolio. Lubricant demand is galloping because the automotive industry is booming,” Vaidya said.

Higher petrochemical production would help IOC as gasoline and diesel crack spreads narrow.

“To de-risk the business of conventional fuels we need more of petrochemicals and lubes,” Vaidya said.

Raising the share of natural gas in the country’s consumption mix from a meagre 6% currently was integral to IOC’s decarbonization strategy, according to Vaidya. Coal contributes about 55% of India’s energy mix, while oil about 30%. The country has been investing heavily in gas infrastructure, including pipelines and LNG import terminal, to reduce dependence on other fuels.

“We are also planning to expand in biofuels and compressed biogas,” Vaida said.

New Delhi in June 2021 advanced its target to achieve 20% ethanol blending with gasoline to 2025, from the prior target of 2030.

India’s fuel ethanol consumption is expected to reach nearly 3 billion liters in 2022 and 3.2 billion liters in 2023, up from an estimated 2.7 billion liters in 2021, according to estimates by Platts Analytics. That would equate to an ethanol blending rate of roughly 6.1% and displace 30,973 b/d of fossil fuels.

Hydrogen, aluminum-air batteries
IOC has commissioned a plant that will produce hydrogen-spiked compressed natural gas, or H-CNG, to increase the country’s reliance on clean energy alternatives.

CNG is passed through a reforming unit that converts part of the methane into hydrogen, with the byproduct resulting an a hydrogen content of 17%-18%. “Buses having Euro-4 equivalent engines will give Euro-6 emissions when they run on H-CNG,” Vaidya said.

H-CNG blends can be produced directly from CNG, bypassing the energy-intensive electrolysis process and high-pressure blending costs.

IOC also entered into a partnership with Israel’s Phinergy to produce aluminum-air batteries in India, as well as, fuel cells, and indigenous hydrogen storage solutions.

The aluminum–air battery produces electricity from the reaction of oxygen and aluminum and is considered an alternative power source for electric vehicles due to its high energy density and longer range.

“We are now doing commercial trials for the aluminum air batteries. Once they are successful — I am sure they will — we will put up a manufacturing unit in the aluminum-rich zone of the country,” Vaidya said.
Source: Platts

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