IOC plans to set up coker unit at Mathura refinery

After the upgradation of its largest refinery, the Koyali refinery in Gujarat, Indian Oil Corporation

After the upgradation of its largest refinery, the Koyali refinery in Gujarat, Indian Oil Corporation IOC is now keen on upgrading its 8 million tonnes per annum mtpa Mathura Uttar Pradesh refinery by setting up a coker unit, which will help process cheaper heavy crude varieties and help the company increase its refinery margins.

IOC8217;s refineries at Digboi, Guwahati, Panipat and Barauni have coker units and the Koyali refinery is set to get one by 2009. The Panipat refinery, for instance, processes 1.5 mtpa of heavy crude, out of a total of 12 mtpa of crude processed. These refineries were designed to process indigenous crude oil.

However, with increasing imports of crude, there is now a need for the refineries to be able to process all types of crude oil from all parts of the world, especially since heavy crude is cheaper than the lighter varieties. This is an advantage enjoyed by Reliance8217;s Jamnagar refinery margins of 11.7 per barrel over PSU refineries, and a gap that IOC is fast looking at bridging by modernising its plants. 8220;The coker unit will require an investment of Rs 1,000 crore, and will yield a minimum return of 20 per cent. Expected rate of return will be around 30-40 per cent,8221; said IOC director refineries B N Bankapur.

There has been concern over the development of the refinery due to the impact of industrial pollution on the Taj Mahal. The company will need permission from the Ministry of Environment and Forests and plans to send a proposal to the ministry saying that the level of emissions would not increase with the coker plant.

The coker plant would help IOC increase its refining margins. The company saw its refining margins go up to 7-8 per barrel in 2006-07 from 4.6 in 2005-06. 8220;We are looking at further increasing margins by 2 per barrel in 2007-08,8221; Bankapur said.

One of the ways to do this is by decreasing the input cost by using cheaper varieties of crude since the difference in prices of the two varieties is significant at 7-10 per barrel.