InvestorQ : Why is IOCL investing heavily into expanding its refining capacity?
Dawn Cherian made post

Why is IOCL investing heavily into expanding its refining capacity?

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Mitali Bhutta answered.
10 months ago
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Indian Oil Corporation board has already approved a massive investment of Rs.32,946 crore which will be invested to expand the capacity of the Panipat Refinery. This will increase the capacity of the Panipat refinery from 15 MMITPA to 25 MMTPA, indicating capacity enhancement of 66%. This capacity boost is expected to improve operational flexibility of the Refinery to meet local energy demand and enhance petrochemicals intensity.

As part of the expansion plan, IOCL will also install polypropylene unit and catalytic dewaxing unit in the Panipat Refinery. Due to higher output of petrochemicals and other value-added specialty products, the margins are likely to be impacted favourably. This will also de-risk the traditional oil business of IOCL, which is still too dependent on the price of Brent Crude and the prevalent gross refining margins or GRMs.

In the third quarter ended December 2020, IOCL reported product sales volume at 23.033 million tonnes and this included the exports too. In addition, the refining throughput was at 17.860 million tonnes while the pipeline throughput was 21.806 million tonnes. It must be remembered that IOCL and Chennai Petroleum jointly control nearly one-third of the country's five million-barrels-per-day refining capacity.

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