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From refinery expansion to electric mobility, India's HPCL plans integrated energy push

Highlights

India's oil demand could rise to 9 million b/d by 2048: Platts Analytics

All key refinery expansion and upgrading projects of HPCL on track

HPCL pursuing solar, biofuels, battery swapping without diluting oil focus

State-run Hindustan Petroleum Corp. Ltd. is pushing ahead with its refinery expansion and upgrading plans by investing millions of dollars in the oil portfolio, while tying up with leading global auto and other companies to expand its footprint in the electric mobility space in India.

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The dual strategic push by the refiner is a sign that while peak oil demand in the country is nowhere near, creating the need for oil-focused companies to still ensure investments in refining and diversify into other forms of energy in order to prepare for the changing energy landscape.

"There is need to focus on the supply of meeting medium-term domestic oil demand growth while reaffirming the commitment to clean energy production in the longer term as part of the transition," said Lim Jit Yang, adviser for Asia-Pacific oil markets at Platts Analytics.

During the first quarter of the current fiscal year (April 2022-March 2023), HPCL invested Rupee 28.09 billion ($354 million) in upgrading refinery and oil products marketing infrastructure, including equity investment in joint ventures and subsidiaries, the company said.

Refinery plans move swiftly

"Mumbai refinery expansion project for enhancing the capacity from 7.5 million mt/year to 9.5 million mt/year has fully stabilized," it said, adding that the refinery operated at 102% of the enhanced capacity during April-June and achieved its highest ever quarterly throughput of 2.43 million mt, compared with 2.31 million mt in the previous quarter.

The Visakhapatnam refinery modernization project for enhancing the refining capacity from 8.3 million mt to 15 million mt was also in the advanced stage of completion, the company said.

"Once commissioned, the additional capacity will further align our refining and marketing portfolio. This project will enable substantial improvement in refinery complexity index, enhance distillate yields and gross refining margins," it added.

And in order to facilitate uninterrupted supply of LPG to customers in the eastern states of Jharkhand and Bihar, HPCL commenced operations of the LPG plant at Barhi in Jharkhand state during the quarter.

In addition, HPCL's ongoing cross country pipeline projects -- Vijayawada to Dharmapuri Pipeline Project -- including a new terminal at Dharmapuri -- and the Hassan Cherlapally LPG Pipeline Project, are in process of being commissioned, HPCL added.

According to Platts Analytics, India's oil demand is expected to rise from about 5 million b/d this year to about 9 million b/d in 2048 before it starts to decline. Over this period, India will need to nearly double its current refining capacity in order to remain as a net exporter of key products by 2050.

Energy transition initiatives

Earlier in August, HPCL and Honda Power Pack Energy India Private Ltd., a subsidiary of Honda Motor Co. Ltd., launched their first battery swapping station in Bengaluru in southern India.

"Internal combustion engine vehicles have to make way for environment friendly electric vehicles for a brighter, greener and sustainable future. However, the adoption of EVs is not easy, especially when charging the EV battery is not as fast as filling the fuel tank," HPCL said.

"Customers can exchange the depleted batteries with fully charged ones in two minutes at e:swap stations," it said, adding that Bengaluru would have more than 70 such stations in a year and then other cities would be taken up.

Sandeep Maheshwari, HPCL's executive director for retail, said that the company was committed to accelerate India's transition to greener energy. It currently has 1,058 EV charging stations at their retail outlets across the country.

HPCL is also pursuing a series of other energy transition initiatives.

Its compressed biogas plant at Budaun in the northern state of Uttar Pradesh is also nearing completion.

Solar panels were installed at 134 retail outlets during the quarter, taking the total number of retail outlets with solar power to 6,545, HPCL added.

Captive solar power capacity of 20 MWp was installed during the quarter across various terminals and plants, taking the total renewable power capacity -- including solar and wind power -- to 175 MWp as of June.

The refiner also achieved an ethanol blending of 10.83% during the quarter, HPCL added.