Refinery expansion can transform Kochi into petrochemical hub

Mumbai: BPCL is undertaking a major expansion of its Kochi Refinery at a cost of over Rs 14,000 crore. Along with this, the corporation is also setting up a Rs 4,500-crore petrochemical complex jointly with the LG Chem of South Korea.

According to John Minu Mathew, Executive Director, Kochi Refinery, these projects could pave the way for development of a host of downstream units in and around Kochi and other parts of Kerala.

In a conversation with Business Line, Mathew said the expansion is also aimed at improving the quality of the fuels produced by the refinery as auto fuels in Kerala is expected to be Euro IV-compliant by 2015.

On refinery expansion
The expansion consists of three different sets of projects. I would like to call them three envelopes with each envelope consisting of different units.

The first one in envelope A is a new crude unit: We are expanding the refinery capacity from 9.5 million tonnes a year to 15.5 mt.

In fact, we are setting up a 10.5-mt a year crude unit. This is because our existing 4.5 million crude unit set up in 1966 is not so fuel-efficient. We will discontinue operation of this unit and put up a modern 10.5 million unit. So the net addition would be 6 million.

Second unit in envelope A will be a fluid catalytic cracking unit (FCCU). This petrochemical unit can produce a significant quantity of propylene. Currently, we are producing about 50,000 tonnes a year and after the expansion our propylene capacity will go up to five lakh tonnes a year. This will be a major addition to our product portfolio.

The third is the delayed coker unit. This is meant for upgrading the bottom products. We would be producing about 1.5 million tonnes of petroleum coke from this unit.

Besides, auto fuels, we will also produce LPG, the production capacity of which will more than double from the present five lakh tonnes a year to 11 lt.

The first set of projects in envelope A, estimated to cost Rs 14,250 crore, is scheduled to be completed by fiscal 2015-16 and will be funded by BPCL.

On Euro compliance
This expansion is also aimed at improving the quality of the motor fuels we produce. By 2015, the auto fuels used in Kerala is expected to be Euro IV compliant. By then, all our auto fuels will also be meeting Euro IV and partly Euro V specifications.

On Petrochemical JV
In the Envelope B, the main project will be a joint venture petrochemicals complex, estimated at Rs 4,500 crore. We have signed an MoU with LG Chemicals of South Korea. It will be located near our exiting refinery. Our refinery will supply propylene for the joint venture through a pipeline. B

On downstream units
In the envelope C, there will be units for producing down stream products.

Using our products as inputs, they can manufacture at least 25 different products.

These units are expected to come up in the petrochemical park being proposed by KSIDC.

Petroleum coke can be used by cement and power plants as fuel.

It is possible to put up a 400-MW power plant using petroleum coke from our unit as fuel and the cost of production of power will be attractive.

We will produce about 1,000 tonnes per day of sulphur. This can be used for making fertilisers.

We are in discussion with FACT for supplying this. Right now, they are importing more or less the same quantity of sulphur. We would be able to supply it through pipeline as molten sulphur.

On State support
The State Government has agreed to give fiscal concessions for our projects through deferment/waiver of VAT, CST and Works Contract Tax, which make our project financially viable.

BPCL’s major foray into petrochemicals could transform Kochi into a petrochemical hub with the setting up of various downstream/ancillary units.