The enormity of GGSR leverages the proximity of petroleum products in the Northern parts of India

Prabh Das
Managing Director & Chief Executive Officer , HMEL, Bathinda
Rationale behind the commissioned of 9-MMTPA Guru Gobind Singh Refinery (GGSR) operates by HPCL-Mittal Energy Limited (HMEL) at Bathinda in Punjab is to leverage the proximity of the deficit in petroleum products in the Northern parts of the country. Prabh Das, Managing Director & Chief Executive Officer, HMEL, Bathinda, talks about the opportunities & challenges and the future trends of refinery businesses in the country in an exclusive interview with Offshore World. He further articulates the expansion plans, new product mixes, marketing & distribution strategy, and the future refinery configuration of GGSR.

How do you evaluate India's refining capacity? What are the key drivers?
India is an important player on the global refining map accounting for about 4.5 percent of the refining capacity of the world, and this fraction is expected to get bigger in 2017. With Indian refineries going for accelerated capacities, the footprint of India on the global refining map as a major player is worth taking note of. The refining industry in India is all set to see an increase in margins and product portfolio.

The rapid increase in refining capacities to cater to domestic demand with a competitive edge, the capability of producing high-end products, the value addition to provide the industry a supply security are key drivers for the industry.

How do you maintain the gross refining margins of HMEL refinery amidst high volatility in feedstock pricing and subsidy burdens? What strategies do you undertake to maintain the positive momentum?
The Guru Gobind Singh Refinery (GGSR) is a zero bottoms, energy efficient, environmental friendly, high distillate yielding complex that produces clean fuels and polypropylene meeting Euro IV specifications by processing heavy, sour and acidic crudes.

Our Bathinda refinery is a state-of-the-art complex refinery that has the ability to process relatively economically priced tough (heavy and sour) crudes that are selected through the best-in-its-class LP software that has been tuned to deliver the best possible margins for the given refinery configuration. We are continuously on the lookout for and regularly undertake low investment Gross Refining Margins (GRM) improvement projects which would help the company in performing well in volatile scenarios.

HPCL-Mittal Energy Limited (HMEL) is committed to maintaining high standards of safety, health and environmental care at all its operating locations, always ensuring that its operations have no negative impact on the safety, health and environment standards. HMEL has established a long term goal of zero injuries, incidents/accidents and environmental violations. The company has a strong focus on preserving the environment, sustainable development, safe work place and enrichment of the quality of life of employees, customers and the community.

GGSR received the BS OHSAS 18001:2007 certification in January 2014 given by the British Standards Institution (BSI) for Occupational Safety Management system. The BSI is the world authority on management systems and having been certified with 18001:2007, it is symbolic of HMEL's testament to committed quality of sound Health, Safety and Environmental practices.

What are the current biggest challenges ahead and how are you gearing up to address the same?
The biggest challenges currently facing the Indian refining and petrochemical industries include the squeezing GRMs, capital intensive nature of new projects, high rates of interest, volatility in exchange rates , plateauing of growth rates of certain fuel products. However, HMEL has a long term off take, which gives it an assured market.

What are the current capacity and the product mix of the refinery? How do you plan to expand the product basket and marketing & distribution strategy for the new products in India and foreign countries?
Our current refining capacity is 9 million metric tonnes per annum (MMTPA). However, we are able to run the refinery at a higher level.

The product mix is always worked up based on economic viability and demand in the market place.

Northern India faces a deficit in petroleum products, and The Guru Gobind Singh Refinery leveraging on its proximity to the northern states namely Punjab, Jammu & Kashmir, Himachal Pradesh, Uttarakhand, Uttar Pradesh, the National Capital Region of Delhi and parts of Haryana and Rajasthan is ideal to fill the fuel deficit that the region faces.

We are marketing all liquid products by supplying the same to HPCL or their nominated companies. The three solid products i.e. Polypropylene (PP), Sulphur and Pet coke are being marketed by HMEL directly. These products have been well received by the industries in North as well in other parts of the country. While Sulphur and Petcoke are mainly consumed within Northern region, PP is being marketed on an all India basis through our network of distributors in all parts of the country. HMEL is currently focussed on meeting the demand in the domestic market.

However, we continue to explore opportunities for export based on economic viability. We export our Naphtha production, as at present there is limited domestic demand. A small quantity of Pet coke is also exported to Nepal and Pakistan to seed the market looking at opportunities for these products in the near future in those regions.

Product evacuation of all liquid products from the refinery is done by rail, road and through dedicated pipelines. Solid products are evacuated through rail and a very minimal quantity is transported through road. Most of the product evacuation is through pipeline in the most efficient manner.

May we have your comments on value addition at the refinery and integration with petrochemicals unit as an economic growth driver? How are you implementing this at HMEL refinery and how will this improve the overall profitability of the refinery?
The nine MMTPA, Guru Gobind Singh Refinery is the single largest investment and first Oil and Gas industry to be set up in the state of Punjab, India. The refinery has brought in rich economic benefits in terms of industrialisation and development of support industries in the state of Punjab. A recent study by University Business School (University of Punjab) has established significant growth in State GDP if associated downstream industry comes up in the state.

The refinery includes a world class mother polypropylene plant for developing several medium and small scale industries. Very few refineries in the country have the capacity to produce polypropylene. HMEL's refinery has created a big potential for industrialisation of the area. If capitalised, it could lead to development of petrochemical industry in Punjab bringing prosperity to the state. HMEL has been engaging with the Government to realise this potential. So far production of these granules is mainly located in Gujarat and Maharashtra. The refinery has been a game changer of sorts leading to product security, direct and indirect employment opportunities and higher tax revenues for Punjab and nearby States with the potential for new investments to develop a downstream industry and make Bathinda a major petro-chemical hub.

Petrochemical and other value addition units such as Aromatics manufacturing facilities enhance the profitability of refineries to a great extent as petrochemicals and aromatics command a significant premium over liquid and gaseous fuel products. For instance, the petrochemical polypropylene is sold at a premium over liquid fuels. This is precisely the reason why HMEL chose to set up a polypropylene plant with a capacity of over 400KT per annum.

How are you addressing the factors influencing refinery configuration in future - convergence of refining & petrochemical operations , energy optimisation, achieving environmental protection, economies of scale and feedstock flexibility?
HMEL's refinery has been set up keeping factors such as convergence of refining and petrochemical operations, energy optimisation, achieving environmental protection, economies of scale and feedstock flexibility. It is a zero bottoms, energy efficient, environment-friendly, high distillate yielding complex refinery that produces clean fuels meeting Euro-IV specifications. It has one of the highest Nelson Complexity Indices in the region and is designed to process a wide variety of crude oils including heavy, sour and other opportunity crudes. It follows a strict compliance to liquid and solid waste management norms. World class environmental friendly technologies such as sulphur recovery units, hydro-treaters, desulphurisation units, state-of-the-art effluent treatment plant, vapour recovery systems and low NOx burners in the furnaces have been implemented at our refinery. The refinery has a blending facility to process fuels between 15 API - 55 API.

Additionally, keeping economies of scale in mind the refinery and associated facilities for crude receipt and transport have been developed in such a manner that they can be expanded to 18 Million Metric Tonnes per Annum. The refinery's Delayed Coker Unit (DCU) produces petroleum coke and ensures that the refinery draws maximum value from the bottom of the barrel.

The environmental impact assessment report for refinery was prepared by the National Environmental Engineering Research Institute (NEERI), the institute renowned for assessing the environmental impact on the Taj Mahal. Post conducting stipulated procedures, the Punjab State Pollution Control Board has also granted a No Objection Certificate (NOC) to our refinery.

A green belt around the refinery has been developed with the help of the Punjab State Forest Department.

HMEL is one of the five refineries in the world to commence integrated operations from day one. The implementation of Manufacturing Execution Systems (MES) integrates information from the various components of the MES, Enterprise Resource Planning (ERP), and control systems within the refinery and delivers a consolidated, single view of the data. The new technology enables HMEL to analyse key corporate business processes including, planned versus actual investments, production, key performance indicators, among others. The system generates near real-time information for HMEL business executives to use to make more intelligent decisions around optimising productivity and margins.

What are the new and niche products the refinery is producing currently or in the pipeline?
Our refinery has the capability to make specialty products such as Hexane and Mineral Turpentine Oil (MTO). Hexane is mainly used as solvent in the solvent extraction units for vegetable oil. It is also used by the pharmaceutical industry as a solvent. MTO is a clear, transparent liquid which is a common organic solvent and is used in painting, decorating, dry cleaning etc. Additionally, ours is one of the few refineries in India that has the capability to produce eight grades of polypropylene which have a wide variety of film, injection moulding and woven & non-woven fabric manufacturing applications. The new product in the pipeline is asphalt which is primarily used in road construction, as the glue or binder mixed with aggregate particles to create asphalt concrete. The refinery has been operating at full capacity.

What are the other external future unforeseen challenges the Indian refiners will have to be prepared for? How should the Indian refining industry counter the same?
Unconventional hydrocarbons can play a big role in securing India's energy security. These are new areas, and therefore have to be carefully nurtured. Shale gas and solar power can become a major source of energy, provided these assets are developed to their full potential. Indian refiners will need to gear up for the impact of change in the upcoming unconventional energy scenario.