IEW 2025 INTERVIEW: India reshaping refining landscape with pronounced shift to petrochemicals, says EIL chief

India's refinery expansion road map is set for a pronounced shift toward petrochemicals in coming years, in a bid to meet the surging demand for downstream products while also adapting to a transforming energy landscape, according to the head of the country's leading refinery consultant, Engineers India Ltd.

Vartika Shukla, chairman and managing director of state-run EIL, strongly believes that Asia, the Middle East, and, particularly, India will continue to pursue refining expansion, but there is a need to adapt to changing market dynamics.

"We foresee a steady growth in refining capacity in India in the coming two decades. India's per capita energy consumption is still one-third of the global average. Therefore, fossil fuel will remain part of the country's energy mix, the proportion of which may change in due course, to fulfill its objective to provide accessible, affordable and equitable energy to its growing population," she said.

"However, we are likely to see a significant increase in petrochemical intensity of Indian refiners. The government and refining companies are prioritizing expansion of petrochemical capacity as part of a broader strategy to enhance competitiveness," she said.

India will be one of the leading drivers of future oil demand growth, according to S&P Global Commodity Insights. In 2025, the country is forecast to deliver relatively faster growth in oil demand compared with China's 1.7%.

In addition, a significant rise in the adoption of electric and alternative fuel vehicles is expected to exert pressure on India's transportation fuel demand, prompting a shift in the refiners' strategy towards an era of crude-to-chemicals.

Key refining projects

"EIL has been associated with major refinery expansion and petrochemicals projects in various engagement models with the clients having different projected completion schedules, contributing to the overall increase in petrochemical output," Shukla said.

Highlighting some of the key refinery projects, Shukla said that Indian Oil Corp. is expanding its Panipat, Paradip, Gujarat, and Barauni refineries to increase their capacities and integrate petrochemical production units. Bharat Petroleum is also expanding its Bina refinery in terms of crude processing capacity as well as increasingly integrating petrochemical production capacity.

HPCL Mittal Energy has also expanded its refinery capacity and integrated petrochemicals, increasing the petrochemical intensity to around 20%. HPCL Rajasthan Refinery is developing a 9 million mt/year refinery and petrochemical project in Rajasthan, which would have a petrochemical intensity of around 26%, one of the highest in India.

"The integration of petrochemical production within refinery operations is a strategic move to capitalize on the growing demand for petrochemical products, both domestically and globally," said Shukla, who leads a company that has built a combined refining capacity of more than 165 million mt/year in India.

Not just in India, EIL has also led the implementation of some of the key refinery projects overseas, such as the Dangote Oil Refinery Project in Nigeria, which has a capacity of 650,000 b/d and is the highest single-train refining capacity in the world.

"EIL is also providing project management consultancy services for the 1.5 million mt/year Mongol Refinery project in Mongolia, showcasing EIL's experience in handling projects in challenging climatic conditions," Shukla said, adding that EIL was currently engaged in multiple projects at various levels in UAE, Bahrain, Kuwait, Oman, Algeria and Africa.

Challenges remain

Speaking on the global refining outlook, Shukla said that the energy transition was significantly reshaping investment trends in the refining sector. With a global push toward decarbonization, the flow of capital into traditional refining assets is increasingly getting constrained.

Investors are wary of long-term returns from conventional refining assets due to policy uncertainties, carbon pricing mechanisms, and declining demand projections for fossil fuels globally. In addition, banks and institutional investors are imposing stricter environmental, social, and governance criteria, making financing for new crude oil refineries more challenging, she added.

"The refining industry is facing complex choices, such as pressure to decarbonize liquid fossil fuels, alternatives for lower carbon crude and other feedstocks, integrating bio-derived fuels, renewable offsite power, and blue and green hydrogen contracts," Shukla said.

"Capital is shifting toward integrated refinery-petrochemical complexes that promise higher margins and lower carbon intensity. Investments in co-processing bio-based feedstocks, hydrogen integration, and carbon capture are gaining traction to future-proof refining assets," she added.

Green bonds, transition bonds, and sustainability-linked loans are emerging as key funding mechanisms for refineries adopting low-carbon initiatives, she added.

"The unpredictability of crude oil demand, driven by electric vehicle penetration, alternative fuels and global economic shifts, are deterring long-term capital commitments. Future refining margins depend on adapting product slates toward petrochemicals, biofuels, and hydrogen," Shukla added.

Spreading its wings

EIL is also venturing into biofuels and is involved in implementing a 2G Ethanol project with green chemicals production for Assam Biorefinery Private Ltd., which is nearing completion.

"Over the years, EIL has diversified its businesses in various related sectors, including energy-efficient infrastructure, data centers, LNG terminals, fertilizers, ports and harbors, mining and metallurgy and underground storage for crude oil and petroleum products.

"In a push to expand our horizon of services, we have recently ventured into defense manufacturing, steel and the nuclear energy sectors," Shukla said, adding that the company was also involved in several LNG terminal and gas pipeline projects.