Numaligarh Refinery’s expansion to treble the capacity from 3 MMTPA to 9 MMTPA: Bhaskar Jyoti Phukan, Managing Director, NRL

Enhancement in refining capacity is expected to have a multi-pronged impact not only for NRL but the entire industrial ecosystem

  • July 02, 2024

Numaligarh Refinery Limited (NRL) registered the highest-ever PAT since its inception at Rs. 3,703 Crore in FY 2022-23. How has the company performed in FY 2023-24?  

FY 2023-24 ended on a positive note for NRL in terms of physical and financial performance. This is despite a setback in the form of a fire during the first quarter of the FY 2023-24 while the refinery was getting back to operations after a planned turnaround of about a month. Refinery turnaround involves inspection and maintenance of all units of the refinery in a holistic manner to ensure its smooth and efficient functioning and is carried out at regular intervals of four years. 

Despite this unforeseen adversity and a valuable quarter lost during the beginning of the FY 20233-24,  the company  bounced  back with resilience and the refinery was able to record a crude throughput of 2,510 thousand metric tonne, equivalent to 100% capacity utilization for 10 months. 

Annual Accounts closing is under progress and we are hopeful that the financial performance will reflect the physical performance. 

Current production capacity of NRL and how has it changed over the years?  

The present refining capacity of NRL is 3 million tonnes per annum (MMTPA) which is the design capacity since inception and commencement of commercial production in the year 2000. However, the company has embarked on a major expansion drive to treble its refining capacity from 3 MMTPA to 9 MMTPA. We are encouraged by the performance of the refinery so far and are aiming at crossing the design capacity of 3 MMTPA and achieve 110% capacity utilisation this year. 

Latest development on NRL's expansion? Total capacity post expansion and how is this going to impact NRL’s overall performance?  

The ongoing Numaligarh Refinery Expansion Project (NREP) to treble the capacity from 3 MMTPA to 9 MMTPA has achieved around 60 per cent progress on ground. Further, as part of the integrated refinery expansion plan, a 1,640 Km crude oil pipeline is being laid from Paradip to Numaligarh, the progress for which is around 70 per cent on ground. The scheduled completion of NREP is December 2025 and we are mobilising all our resources and moving ahead aggressively to achieve the target as per set timelines. 

Enhancement in refining capacity is expected to have a multi-pronged impact not only for NRL but the entire industrial ecosystem. With increased refining capacity, NRL will be able to contribute in enhancing regional energy availability apart from venturing for exports to neighbouring countries. It is expected to boost economic growth in the region by creating direct and indirect employment opportunities as well as growth in ancillary industries.  

NRL has announced Capex of Rs. 35,000 crore in the next 5 years. Can you please elaborate on this?  

Refinery project is almost 60% through on ground while the Paradip Numaligarh Crude Oil pipeline has achieved a progress of 70%. Corresponding amount of capital expenditure in terms of financial commitment has been made. These form a major part of the Rs. 35,000 crore investment which will continue till the end of 2025. NRL is also putting up a Polypropylene unit of capacity 360 KPTA for which environmental clearance is awaited. Once on board, another Rs. 7,000 crore would be apportioned from the above Rs. 35,000 crore capex proposed. 

What is the development of setting up a 2G bio-refinery?

The 2G bio-refinery plant at Numaligarh which is designed to produce 49,000 metric tonnes of bioethanol has already been mechanically completed during the end of March 2024; with some residual jobs remaining. It is a pretty complex project and therefore would typically require 3 to 4 months for commissioning. All out efforts are being undertaken to commission the plant quickly and safely tentatively by mid July 2024. 

The 2G bio-refinery is unique in the sense that bamboo biomass is being used as a feedstock, which no one else in the world has ever tried. The North East of India has abundance of bamboo availability which is being tapped for the purpose. The bio refinery would require around 300,000 metric tonnes of dry bamboo annually. In order to maintain unhindered supply, we have also carried out major tweaking in the whole supply chain of bamboo. Our aggregation model is about offsite chipping of the bamboo and a great deal of value addition will happen at the village level. 

Other than bioethanol, a chemical called furfural and acetic acid would be produced in the process, which would ensure the economics of the project. The Government of India has granted a Viability Gap Funding (VGF) of around Rs. 150 crore for the project.  

NRL has signed a pact with NTPC for a green chemicals project. Please share details? 

Banking on the experience gained by NRL so far, NTPC has signed a MoU with our company for collaboration and knowledge sharing in setting up a biorefinery like the one we are putting up in Numaligarh. The biorefinery will be put up in   Salakati, West Assam and a separate catchment area for growing bamboo has been identified. 

Biofuels have a great future ahead as is manifest by the focus it has gained in recent years not only in the milieu of the Government of India, but globally. NTPC can also explore the opportunity to utilise the lignin from bamboo and feed it into their plant along with coal, to make their electricity greener. 

NRL and Inland Waterways Authority of India (IWAI) has inked a pact for petroleum products transportation. How is the progress on this front? 

Most of the over dimensional and overweight consignments for NREP have been transported to Numaligarh utilising waterways. Most of these equipment are being produced in Dahej in Gujarat along the West Coast of India; then being transported through big vessels up to Haldia to be trans-shipped onto river going barges that take NW2 via Bangladesh to reach Assam.  

The consignments are finally offloaded at a location very close (about 10 Km) from our refinery wherein a jetty has been constructed on the river Dhansiri, a tributary of the mighty Brahmaputra. However, in order to navigate this route, we need waterways and adequate drafts around the year.  

I take the opportunity to thank IWAI for their support in facilitating the above due to which we have been able to transport consignment of weight upto 1,500 tonnes along this route. Moreover, the current infrastructure will pave the way for future transportation of materials as well as products through the river route that would happen mostly downstream. NRL will produce Polypropylene in the future while solid sulphur is already being produced. Eventually, the river route is expected to be utilised to transport a variety of refinery products, other than transporting petrol and diesel. 

The company also opened its first overseas office in Bangladesh. Is there any plan to expand more overseas offices? 

NRL has a pipeline named India Bangladesh Friendship pipeline running up to Parbatipur in Northern Bangladesh from its terminal at Siliguri, West Bengal for transportation of Diesel. We are also exporting Paraffin Wax to Bangladesh and have plans to export Polypropylene which has a good demand in Bangladesh, mainly to meet its packaging needs for cement and readymade garment industries.  

To expand our footprints and export more products to Bangladesh, we thought it prudent to open an office in Dhaka. We are also exploring markets in Nepal and Myanmar and tap its potential for NRL products. 

How does NRL contribute to the socio-economic development of the region?

There are three to four key contributions of NRL towards socio-economic development of the region. 

 Firstly, direct and indirect employment to hundreds of youths from the region. Secondly, we are the highest tax payers in the North East region and the Income Tax Department has repeatedly recognized the company on this account. Thirdly, NRL has been able to transform the socio-economic status of the region through its social initiatives that are undertaken under corporate social responsibility. 

Fourthly, we operate a 100 bedded multi-speciality hospital called VK NRL Hospital within our township premises; that has been able to deliver quality health care in the region since the year 1998. The hospital also conducts mobile medical camps, delivering healthcare to the doorsteps of the community in 70 villages covering a population of 80,000 rural residents within a radius of 10 Km of the refinery. We have also set up a VK School of Nursing that provides quality Nursing Education to girls from the region to make them self-sufficient and capable of earning their own livelihood.  

What are some of the major challenges faced by NRL in its operations?

Operating expenses per barrel of crude oil for a 3 MMTPA refinery is very high since manpower and associated expenses are almost at par for a refinery with higher capacity. We are hopeful to overcome the challenge when our 9 million tonnes refinery is commissioned by the end of the year 2025. 

Also, in order to ensure long term growth and sustainability, we are planning to put up a petrochemical complex for producing Polypropylene, which is the road ahead for all existing refineries. This is expected to attract more and more ancillary industries in the domain of chemicals, especially niche chemicals. Also, considering Government of India’s mandate of 1% blending of sustainable aviation fuels (SAF) to Aviation Turbine Fuel ( ATF) by 2025 in line with global sustainability standards, NRL is exploring the means to produce SAF. 

We are tucked in one corner of the country and have a major challenge of high transportation (freight) costs for our products. But fortunately over a period of time, with phenomenal economic development, North East is witnessing double digit growth in both diesel and petrol demand, easing our logistic issues. For example, when we first started marketing our products in the year 2000, the geographical range was 1,500 - 2,000 km for which we had to bear substantial freight under recovery. Now, the product envelope has shrunk to almost around 700 - 800 km and therefore our freight economics have improved significantly. As we diversify into more products, we are hopeful that we are able to meet the growing demand for our products in the region. Also, we are focussing on export to our neighbouring countries like Bangladesh, Bhutan, Nepal and Myanmar which are geographically closer. 

NRL plans to achieve net zero by 2038. Can you discuss the steps taken by NRL to ensure the safety and environmental sustainability of its operations?

Our first and major initiative is the carbon neutral Bio Refinery in Numaligarh, which is under commissioning. The only carbon dioxide emissions that take place are during the fermentation process; when glucose gets converted to ethanol. We are planning to capture this carbon dioxide in liquid form. 

Another green initiative is putting up a 2.4 KTPA green hydrogen plant; which is expected to be commissioned by June 2025.

Several other technologies are being adopted to make the refinery fuel efficient and green. By reducing fuel consumption for running the refinery, we aim to reduce greenhouse emissions.  

We are also creating a huge carbon sink by afforestation of hectares and hectares of land in different districts of Assam. We have already acquired around 70 hectares of deforested land and developed three major nurseries for generating bamboo saplings in collaboration with the Government of Assam. Another MoU with the Assam government for afforestation of 28 hectares is on the cards.  

Going forward, we are planning to capture carbon dioxide which gets generated in the process; to reduce Scope 1 emissions.

To create pathways to meet our net zero targets, we are in serious discussions with major players in the field.  

What role does NRL play in the global energy transition and shift towards cleaner and renewable energy sources?

As stated earlier, we have embarked on a 2.4 KTPA green hydrogen plant project. For that purpose, we need around 18 MW of electricity from round the clock green electricity sources. We are exploring opportunities for power purchase agreements for green electricity. 

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