Indian refineries gear up for Euro-IV transportation fuels

India currently has 19 refineries with a total capacity of 3.76 million bpd, of which public sector units account for 2.10 million bpd and the private sector 1.66 million bpd. These refineries vary considerably in terms of capacity and sophistication. The Digboi refinery (0.0013 million bpd), established in 1901, is the world’s oldest continuously operating refinery. Jamnagar is the largest single location refinery in the world hosting Reliance’s most modern twin refineries, with a total capacity of 1.24 million bpd mainly for export.

Gasoline and automotive diesel account for 50% of total domestic refinery production in India. This has been driven by a very large increase in the growth of transport vehicles due to an upwardly mobile middle class population of around 300 million. Vehicle sales in July 2009 touched almost 1 million units (cars: 12%, commercial vehicles: 4%, two wheelers: 76% and others: 8%).

CNG capital of the world

In the year 1998, arising from a public interest litigation about the increase in pollution loads in the capital city Delhi, the Supreme Court mandated that all local buses and three-wheelers should shift to CNG. As a result of the switchover, pollution loads improved dramatically and Delhi is now the CNG capital of the world. Anticipating the need for improved emission norms across the country, an auto fuel policy was laid out by the government in 2003, which set progressively stricter various emission norms. These required an improvement in the quality of gasoline and automotive diesel as well as vehicular technology. To meet these norms, currently 13 major cities in India (including Agra, home to the Taj Mahal) are Euro-III compliant and will be Euro-IV compliant by April 2010. The rest of the country, which is currently Euro-II compliant, will need to be Euro-III compliant also by April 2010. In the case of two-wheelers, separate norms have been set which are more stringent than those for the European Union.

Efforts to meet the norms

To meet these norms on transportation fuels, Indian refineries have invested heavily in fluidised catalytic cracking units, hydrocrackers, reformers, hydrotreaters and hydrodesulfurisation units. The total investment by April 2010 is expected to be US$ 6400 million. No norms have yet been set for 2010 onwards.

Although refiners are allowed to charge marketing companies import parity prices for products, the retail prices of transportation fuels are controlled by the government with subsidies being provided by the government and public sector upstream producers and marketing companies. It remains to be seen whether government will allow higher pricing for Euro-IV fuels. The automobile industry already exports Euro-IV compliant vehicles to Europe and other markets and therefore has the technology to make the switchover in the domestic market.

Author: The Energy and Resources Institute (TERI), www.teriin.org.

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