S. Bharathan , Director - Refineries, Hindustan Petroleum Corporation Limited (HPCL)
How would you explain the global trends in petrochemicals, oil, and gas in 2023 and how it will impact India?
Global Oil Outlook: Russian announcement of a production cut of 500 kbpd from March will result in reduced supply whereas refinery capacity additions in later part of this year (Kuwait’s 584 Kbpd Al Zour, Oman’s 220 Kbpd Duqm, and 400 Kbpd in Shandong, China) will provide support to crude demand. According to IEA’s latest projection, average annual growth in oil demand is expected to show robust growth of 2 Mbpd to reach 102 Mbpd as the global economy continues to recover. Recently, OPEC has also affirmed its commitment to extend 2 Mbpd of cuts agreed in October 2022, till the end of 2023, maintaining restricted supplies for crude oil thus, the fundamentals of consistent demand growth and restricted supplies will keep crude price supportive. In the near term, refinery margins are expected to remain at current levels and it is unlikely that we will see a repeat of 2022 (record high margins). Refinery margins will remain supportive due to robust demand growth especially from India and China. Having crude oil prices and refinery margin in a stable price band will help India and HPCL as it will result in stable prices for consumers and sustainable margins for the company.
Global Gas Outlook: Reason for an all-time high LNG prices were on account of conflict between Russia and Ukraine. Previously dominant, Russian piped gas supply to Europe has been decimated and LNG is the only meaningful supply alternative. Recent corrections in LNG prices are on account of milder winters in Europe. Since European buyers have topped all their storages ahead of winter, the lower demand and high inventories have pushed down the price. Europe’s structural pivot away from Russian supply means there will be prolonged and fierce competition, also, for uncommitted cargoes, resulting in sustained elevated price levels in Europe and Asia and however, in case of extreme weather or any unplanned shutdowns, the LNG market will be prone to price spikes.
Global Petchem Outlook: Petrochemical demand is expected to gradually recover specially as domestic consumption in China rises during the year and Incremental cracking capacity coming online during 2023 and high feedstock prices will continue to pressure petrochemical margins.
Key milestones achieved by HPCL in FY 2022-23 and what are the plans for FY 2023-24?
Refining milestones in FY 2022-23 - HPCL refineries have processed more than 19 MMT of crude in FY 2022-23 which is the highest ever yearly crude throughput registered by HPCL refineries. Mumbai Refinery processed 9.8 mmtpa of crude (against an installed capacity of 9.5 mmtpa), in the very first year after revamp and New Crude Distillation Unit with installed capacity of 9 mmtpa has been commissioned at Visakh Refinery towards end of March ’23, along with all associated utilities and offsite facilities.
Marketing milestones in FY 2022-23 - The LPG infrastructure has been strengthened with the commencement of operation of 120 TMTPA new LPG plant at Barhi in the state of Orissa. Construction of a new LPG plant at Patalganga, Maharashtra has been completed during Q3 of 2022-23. Pipeline network has been expanded with commissioning of 2 major pipelines (Vijayawada-Dharmapuri and Hassan-Cherlapalli LPG pipeline) and the network length has exceeded 5,000 km and capacity crossing 36 MMTPA. Received Letter of Intent (LoI) from Petroleum and Natural Gas Regulatory Board (PNGRB) for Grant of Authorisation of 215 km long for new pipeline, Haldia-Panagarh LPG Pipeline and project execution has been initiated. The alternate fuel option to the customers has been enhanced by commissioning of 1,362 CNG facilities at retail outlets, 1,471 EV charging stations as of February 2023. The customer touch points constitute of 20,979 retail outlets, 1,638 SKO/LDO dealers, 297 Lube distributors,123 Carrying & Forwarding Agents, 736 Door-to-door delivery dispenser, and 6,272 LPG distributorships with a customer base of above 9.35 crore LPG consumers as of February 2023.
Plans for FY 2023-24 - Completion of Visakh Refinery Modernization Project (VRMP): The Main unit (CDU-IV) has been commissioned along with all utilities and offsite facilities. Other units will be progressively commissioned in this year. Substantial improvement in refinery complexity index, enhanced distillate yield and improved GRMs are the benefits envisaged from the project.
Completion of LPG cavern, Mangalore. Completion of construction of 80,000 MT LPG Cavern at Mangalore to enhance the LPG store capacities and expanding New LPG bottling plant capacities. A New Bottling plant of 120 TMTPA at Pindwara, Rajasthan is under construction and expected to be completed in 2023.
New verticals where HPCL is focusing and how it will impact the company?
HPCL is focusing to create value and growth by strengthening existing businesses, leveraging new growth engines such as Petrochemicals and Natural Gas and seizing green and emerging opportunities with focus on technology and innovation. Special emphasis on Environment, Social & Governance (ESG) parameters and building strategic partnerships which shall provide competitive edge to the organization in changing business landscape.
In Natural Gas, HPCL is participating in the entire value chain including the LNG import infrastructure, natural gas pipelines, and CGD infrastructure. Construction of 5 MMTPA LNG regasification Terminal at Chhara port by HPLNG, 100% subsidiary of HPCL, is in progress and is expected to be completed in 2023. HPCL along with its JV/subsidiaries have authorization to set up CGD infrastructure in 23 geographical areas in 12 states.
Large-scale investments by HPCL are underway for building the petrochemical manufacturing capacities through joint venture route. For marketing of HPCL’s own produced and externally sourced petrochemical products, the ‘Route to Market’ strategy has been developed and is under implementation. The HP DURAPOL brand of petrochemicals will be further leveraged in expanding presence in Petrochemical marketing.
The organisation is seizing the green and emerging opportunities by expanding footprints in advanced/alternative fuels. The Compressed Bio Gas (CBG) plant and advanced technology solutions are expected to be operational shortly. Expansion in renewables is being done on aggressive scale through solarisation of retail outlets, enhanced usage of renewable power for meeting the operational requirements of refineries, setting up of infrastructure for power import at refineries etc. Green Hydrogen is emerging as a clean fuel of the future.
HPCL is setting up a 370 TPA green hydrogen plant for Visakh refinery to provide green hydrogen to meet partial requirements of the refining process in line with the National Green Hydrogen Mission. With respect to alternate fuels/energy storage new avenues of value creation in the Electric Vehicle (EV) ecosystem including battery swapping and energy storage solutions are being explored in collaboration with various technology start-ups & OEMs etc.
The vast network of over 20,900 retail outlets of HPCL is being leveraged while foraying into emerging opportunities including non-fuel and adjacent business opportunities.
HPCL's refining capacity is 13.97 MMTPA per annum and what's your share nationally? How are you planning to increase your capacity and market share?
HPCL refineries recorded crude throughput of 13.97 MMT in FY 2021-22, against installed refining capacity of 15.8 MMT during the period. Mumbai Refinery completed its expansion project in FY 2021-22 and enhanced its installed capacity from 7.5 MMTPA to 9.5 MMTPA. As of 1st April 2022, HPCL refineries have a combined installed capacity of 17.8 MMTPA. During March 2023 Visakh Refinery commissioned a new Crude Distillation Unit (CDU-IV) with installed capacity of 9.0 MMTPA, as part of Visakh Refinery Modernization Project (VRMP). Capacity of Visakh Refinery will be enhanced from the current 8.3 MMTPA to 15.0 MMTPA upon completion of the VRMP project.
With this combined installed capacity of HPCL refineries will get enhanced to 24.5 MMTPA. Further, with commissioning of 9 MMTPA greenfield refinery cum petrochemical complex, HPCL Rajasthan Refinery Limited (HRRL), combined installed capacity of HPCL refineries will be enhanced to 33.5 MMTPA.
What is the current status of (9 MMTPA refinery capacity and 2.4 MMTPA of petrochemicals production capacity) greenfield refinery cum petrochemical complex HPCL Rajasthan Refinery Limited (HRRL) at Pachpadra in Barmer District?
The project of setting up a 9 MMTPA Refinery cum Petrochemical complex at Barmer Rajasthan has achieved significant progress with placement of turnkey contracts for major processes and LSTK contract for associated works/utilities etc. Construction work is in progress at the site at full swing.
What was the annual Ethanol production capacity of HPCL Biofuels Ltd. (HBL) in FY 2022-23 and plans for FY 2023-24?
Our Ethanol production capacity is 60 KLPD each of our two plants (Lauriya & Sugauli) i.e., 120 KLPD. The units are run only for four months in a year during the sugarcane harvesting season. Our annual Ethanol production target was 13,800 KL for FY 22-23 however we have so far produced 14,689 KL. The projection for coming FY 23-24 is 15,800 KL together for both the plants.
What is the status of City Gas Distribution (CGD) and plans for FY 2023-24?
HPCL along with its JVs have authorization for setting up of CGD network in 23 Geographical Areas (GA’s) comprising 48 districts spread across 12 states with planned investment of over Rs. 10,000 crores during the next few years. CNG Stations have been commissioned in GA’s allotted till 10th Round of Bidding and pipeline laying/registration for D-PNG Connections has commenced. In FY 2023-24, City Gas Distribution network will be expanded in 6 GAs.
What are the current and upcoming research initiatives at HPCL's R&D centre? Areas where you are working and how it will benefit the company in the long run?
The key areas of research at HPCL R&D Centre include: Indigenization of Refinery Technologies; Indigenization of Chemicals/Additives/ Catalysts; Novel catalyst and additives development for key refining operations; Energy efficient process/technology development; Widening crude oil basket/opportunity by evaluating new crudes and improving product blends; Residue Upgradation for more valuable products; Exploration of alternative energy sources – Biofuels/Hydrogen/Solar; Studies in modeling & simulation of various refinery processes; Petrochemicals & Polymers; Process Intensification; Conversion of Biomass to fuels; CO2 to Fuels & Chemicals; Batteries for Energy Storage & Fuel Cells; Providing support to refinery operations, marketing, lubes, and other SBUs of HPCL; Engine research for evaluation of fuel additives, development of clean combustion engine technology, and alternate fuel engine; and Lube formulation development. In the long run, R&D efforts will be helpful in improving refinery margins through development and implementation of indigenous process/ product/catalysts.
HP Green R&D center (HPGRDC) is today focusing on green and alternate energies. The center uses only Green Hydrogen for running all its pilot plants on round the clock basis for more than three years. The main building in the campus is certified as “Net Zero Building”. The R&D facility is being expanded by addition of scale-up facilities for products, catalysts and additives. Large pilot plants are built to demonstrate patented technologies. Today HPGRDC has filed 445 patents within the last 7 years and already 160 of them have been granted with 50% of them from different countries.
Is HPCL looking at all aspects of the hydrogen value chain. What are your plans for capturing Hydrogen opportunities in the country?
HPCL-Visakh Refinery is the first refinery in India to order an industrial scale Electrolyser for Green Hydrogen production. HPCL Green R&D centre has developed technologies for Blue Hydrogen and Turquoise Hydrogen. Pilot plant is running in the R&D center for producing a novel patented process for making H-CNG which does not consume water or generate CO2. A demonstration plant for Blue Hydrogen is being set-up in Visakh Refinery. HPCL will continue to explore all possible opportunities in the hydrogen value chain.
Capex invested in FY 2022-23 and what is the plan for FY 2023-24?
Capex invested in FY 2022-23 is Rs. 11,114 crore (as of February 2023) and Capex planned in FY 2023-24 is Rs. 12,000 crore.
How is the company striking a balance between environment-friendly policies and sustainable growth?
The Government of India has implemented several environmental-friendly policies and schemes in recent years, aimed at promoting sustainable development and reducing the country's carbon footprint. Some of the key examples are:
FAME (Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles) I & II to promote the adoption of electric and hybrid vehicles in the country.
Installation of 500 GW (gigawatt) of renewable energy capacity by 2030 will involve an investment of at least Rs. 2.44 lakh crore.
‘Sustainable Alternative towards Affordable Transportation (SATAT)’ scheme to promote the use of compressed biogas (CBG) as a clean fuel for transportation. The scheme aims to set up 5,000 CBG plants by 2025 and promote the use of CBG in vehicles.
Biofuel Policy launched with the aim of reducing India's dependence on fossil fuels and promoting the use of biofuels. The policy aims to achieve a 20% blending of ethanol in petrol and 5% blending of biodiesel in diesel by 2025.
Increasing the share of natural gas in its primary energy to 15 per cent by 2030.
The National Green Hydrogen Mission has been launched with the aim of promoting the use of green hydrogen as a fuel. The mission aims to generate hydrogen from renewable energy sources and use it in various sectors such as transportation, industry, and power generation.
India has set a goal to reduce its greenhouse gas emissions intensity of its GDP by 33-35% from 2005 levels by 2030. This goal was announced by Prime Minister Narendra Modi at the 2015 United Nations Climate Change Conference (COP21) in Paris.
The objectives of these policies and schemes are to promote sustainable development, reduce greenhouse gas emissions, promote clean energy, and improve air quality in the country. HPCL is actively participating in all the schemes towards sustainable growth and is striking a balance between environment-friendly policies and sustainable growth with various actions, which are detailed as under:
In Participation in the EV ecosystem, Battery e-Swap Station was launched at Bengaluru under the tie-up with Honda Power Pack Energy India Pvt. Ltd. (Subsidiary of Honda Motor). HPCL also tied up with Hero MotoCorp for setting-up charging infrastructure for two-wheeler electric vehicles (EVs) across the country, thereby providing a fillip to mass mobility’s transition towards an electrified future. As of February 2023, 18 battery-swapping stations were installed at various locations along with EV charging stations. The number of EV charging stations has crossed 1470 numbers as of February 2023.
In renewable business, the existing portfolio is being strengthened with the setting up of solar capacities at various locations. Solarisation was completed at 2,860 retail outlets during Apr-Feb’23, taking the total number to 9,271 as of Feb'23. ~44% of HPCL retail outlets operate on renewable energy.
Under the SATAT scheme, HPCL has released 474 LoIs (Letter of Intent) with CBG production capacity of 2,576.2 Tonnes per Day (equivalent to 940.3 TMTPA) for setting up of CBG plants to eligible entrepreneurs.
In Biofuels, HPCL is actively participating in the Ethanol blending programme and has reached to the level of about 11%. HPCL is setting up 100 KLPD 2G ethanol refinery at Bathinda and 14 TPD capacity compressed biogas plant at Budaun in Uttar Pradesh. A cow dung based CBG plant is being set up at Pathmeda in Rajasthan. HPCL is participating in the entire value chain of Natural gas.
HPCL is also setting up a 370 TPA Green Hydrogen infrastructure at Vizag Refinery.
The above actions shall help HPCL achieve sustainable growth.
When are you planning to become Net Carbon Zero and what are the different milestones set by the company?
HPCL declared its plans to reach net-zero in Scope 1&2 by 2040. HPCL have also identified key levers in reaching net-zero such as enhancing energy efficiencies in own operations, fuel switch to bio gas in refineries, usage of 100% renewable power in refineries and replacement of hydrogen requirement by green hydrogen, abatement using CCUS/Offsets etc. In addition, for reduction in Scope 3 emissions, HPCL has plans to transform its product portfolio with low/no carbon fuels and thereby reducing the overall emission intensity of the company.
What are the key CSR initiatives being undertaken by the company in FY 2022-23 and plans for FY 2023-24?
HPCL has undertaken various CSR activities since its incorporation in many parts of the country for the welfare and development of underprivileged communities in order to make them self-dependent. CSR of the Corporation has been in-sync with various prevailing statutes and guidelines. The details of CSR activities undertaken by HPCL are provided below:
Project ADAPT; Children with Special Needs: Project ADAPT aims to enhance the quality of life of Children with Disabilities (CwD) through provision of online education, individual training and therapeutic treatment. In addition to online educational classes for ‘Children with Disabilities (CwD)’ uninterrupted therapy services were provided through Tele-Rehab, which emerged as a key vehicle for delivery of services. This new model of providing online services helped the parents and the beneficiaries cope with the pandemic.
Project Nanhi Kali; Girl Child Education: Project Nanhi Kali provides holistic development and support academic pursuit of girl children from tribal and urban slum locations. The project addresses ‘challenges and constraints’ faced due to gender gap in communities and aims to develop gender equality. During the year, ‘Nanhi Kali’ girls were provided with online remedial classes, material kits, sports curriculum and other guidance & counselling on personal hygiene and career development.
Project Dhanwantari; Rural Healthcare Program: To provide diagnosis, treatment and health awareness, Mobile Medical Vans (MMV) are operated as ‘Reach-In approach’ to the people residing in rural and urban slum communities. The MMV offers basic medicines, consultation and referrals. The majority of beneficiaries are women, children and elderly from less-privileged sections of society whose general health is neglected due to poverty and lack of resources, awareness and facilities.
Project Dil without Bill; Heart surgeries of Children: Awareness camps are carried out for identifying patients from lower income groups, especially children with heart ailments and support for conducting heart surgeries is granted.
Project Suraksha; Khushi Clinics: To arrest the spread of HIV / AIDS and STIs amongst truck drivers, Khushi clinics are operative on highways. The project provides AIDS awareness, STI treatment and basic healthcare facilities.
Project Kashmir Super-50 Medical: This project supports the ‘Sadhbhavna’ (Goodwill) efforts undertaken by the Indian Army in Kashmir valley. This project provides mentoring and coaching to aspiring students from Jammu and Kashmir Region for preparing them for various Medical entrance exams in India. This residential training program gives wings to academic aspirations of youth for their career development.
Project Ladakh Ignited Minds Super- 45 ‘Medical & Engineering’: This project supports the Indian Army’s initiative in ‘Winning Hearts and Minds’ of the local population. This project supports the less-privileged yet aspiring students of Ladakh Region in enabling them to compete in various streams like Engineering, Medical and other career-oriented programs.
Project Kargil Ignited Minds - 50 ‘Medical & Engineering’: This project supports the less-privileged yet aspiring girl students of Kargil District in enabling them to compete in various streams like Engineering, Medical and other career-oriented programs (1st batch during 2022-23).
Project White Knight Centre ‘Medical & Engineering’: This project supports the less-privileged yet aspiring students from Rajouri and Poonch District in enabling them to compete in various streams like Engineering, Medical and other career-oriented programs (1st batch during 2022-23).
Swachhta Pakhwada: ‘Swachhta Pakhwada’ Campaign by undertaking various initiatives to spread awareness through all HPCL locations and involving more than 20 Lakh stakeholders across the country. For the Swachhta Pakhwada campaign held during the period 1st – 15th July, 2022, HPCL was awarded among top three Oil and Gas CPSEs by the Ministry of Petroleum and Natural Gas.
Community Development: HPCL has conducted various field-level activities with special focus on all round development of society especially women. These projects and field activities undertaken by HPCL aim to provide basic amenities in rural areas. Activities like support to old age homes, orphanages, Anganwadi, providing basic amenities in schools, improvement of rural infrastructure, improvement of basic infrastructure in Government Hospitals have supported the development of local communities. Scholarships for students from weaker sections (SC, ST, OBC and PwD) in schools and colleges were provided amongst which more than 50% beneficiaries are girl students. Contribution made to Armed Forces Flag Day Fund (AFFDF) for the care, support, welfare and rehabilitation schemes for Ex-Servicemen (ESM) and their dependents.
Provisional CSR Action Plan for FY 2023-24: The ‘Ongoing Projects’ shall be continued and implemented as part of CSR Action Plan for FY 23-24. We shall undertake CSR projects in Corporations’ focus areas viz. Education, Healthcare, Sports, Skill Development and Environment & Community Development. Some of the prominent ‘Ongoing Projects’ are: Support for upgradation and modernization of Gujarat Science City, Ahmedabad; Reconstruction & Restoration of Shri Kedarnath town and surrounding areas; and Construction & redevelopment of Shri Badrinath town as a smart spiritual hill town.
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