APPEC: Indian refiners underscore crude diversification, processing flexibility as key

India's influence among global crude producers is strengthening as its refiners increasingly diversify and process a wide range of crude grades, making the country a preferred destination for exporters seeking stable, long-term demand at a time when oil consumption is projected to grow, even as it declines in other major economies, Indian refining leaders told the APPEC conference in Singapore on Sept. 9.

Recent geopolitical tensions and supply chain disruptions have forced refiners to rethink their sourcing strategies, but India's refineries have adapted to shifting global oil trade flows, they added.

"During the recent disruptions, the sources of crude oil have been diversified. I can only say that we have got a seat at the table and leverage because of the flexibility of diversifying the sources of crude oil. We gained leverage to extend our importance at the table," Arvind Kumar, director of refineries at state-run Indian Oil Corp., told the conference.

He said that while the Gulf region remains geographically and economically important, India has reduced its reliance on traditional term contracts from the region.

"The Gulf is nearby, and it made economic sense to tie up term contracts to the extent of 50%-60% at one point in time. Today, those volumes are not coming. So, we have shifted to various alternate sources from the US, Latin America, Venezuela, Brazil, and West Africa. Some crude opportunities are also coming from Russia and other places, but the scenario is that we need to adopt those," Kumar added.

Size and proximity

Manu Sehgal, vice president for strategy and feedstocks at HPCL-Mittal Energy Ltd., said India's market size and proximity to the Middle East make it a focus for exporters.

"We are also next to the Middle East; we are the natural market for them. There is some extra effort in making the cargoes available, which makes operations easier and in getting the grades that you want," Sehgal said.

"That effort is definitely there, and it may not just be a function of the size of the market. We've had longer-term relationships, and on both sides, there is a lot of professionalism to meet that. Going ahead, we may become a preferred destination compared to other markets," he added.

Shelly Abraham, executive director at state-run Bharat Petroleum Corp., said India's market fundamentals remained robust.

"Unlike some other major economies today, where demand is already showing signs of plateauing, India is still growing and is likely to continue to grow for some more time. Our refinery capacity is being added; it is increasing," he said.

"Even this year, one of the national companies commissioned a greenfield refinery. My own company is in a very advanced stage of investment decision for a new refinery on the east coast of India. So, refinery capacity is also going up. Demand is going up," Abraham added.

India's first greenfield integrated refinery complex in a decade -- HPCL Rajasthan Refinery Ltd. -- began operations July 4. The integrated refinery and petrochemical complex as an annual capacity of 9 million metric tons and 2.4 million mt of petrochemicals. It has a Nelson Complexity Index of 17.

Growing refining complexity

Over the past 15 to 20 years, Indian refineries have undergone significant transformation by investing in greater complexity and flexibility within their operations. Back in the 1990s and early 2000s, these refineries relied mainly on crude oil from the Middle East and rarely considered alternatives. Today, due to advanced refining systems, they are able to handle a broad spectrum of crude types, with API gravities ranging from as low as 16-17 up to 55, participants at the conference said.

Additionally, the refineries can process crude oils with high levels of chlorides, nitrogen, and total acid number. This enhanced capability not only increases operational flexibility but also offers sellers more options and opportunities, refiners added.

"This flexibility is crucial as India faces competition from other buyers, especially during periods of supply tightness or geopolitical unrest," Abraham said.

While trade priorities are evolving, maintaining competitiveness and operational flexibility remains crucial for refineries in the future. This flexibility isn't limited to just operations -- it also includes commercial adaptability, feedstock choices, diverse strategic approaches, logistics, and sensitivity to storage and supply dynamics, said Premasish Das, executive director for oil analytics at S&P Global Energy CERA.

Debangsu Ray, cluster president and head of the Jamnagar refinery and petrochemical supersite, told Platts, part of S&P Global Energy, in an interview during APPEC that India's Reliance Industries Ltd. can process crude from diverse regions due to the advanced configuration and scale of its Jamnagar complex — a flexibility that will help it manage future supply disruptions along key shipping routes such as the Strait of Hormuz.

Jamnagar refinery's Nelson Complexity Index of 21.1 -- the highest in the world -- gives the asset the versatility to process almost all crude oil grades and meet the increasingly differentiated, more demanding product specifications of global markets, he added.