BPCL to build India’s last greenfield refinery & petchem project in Andhra Pradesh at ₹6,100 crore

Bharat Petroleum Corporation Ltd (BPCL) has picked Andhra Pradesh to set up a new oil refinery-cum-petrochemical (petchem) complex, which may be the last greenfield project in India. The state-owned oil marketing company (OMC) has an ambitious energy transition plan to transfer to net zero emissions.

In a regulatory filing to the stock exchanges, BPCL said its board "accorded its approval to commence pre-project activities for setting up a greenfield refinery cum petrochemical complex in east coast at Andhra Pradesh at an estimated cost of ₹6,100 crore". BPCL did not reveal the timelines for completing the project.

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BPCL to set up India's last greenfield refinery project

According to BPCL, the pre-project activities include initial studies, land identification and acquisition, preparation of a detailed feasibility report, environment impact assessment, basic design engineering package, and front-end engineering design. The refinery could have a capacity of at least nine million tonnes (180,000 barrels per day). 

BPCL is India's third-largest oil refiner behind the state-owned Indian Oil Corporation (IOC) and Reliance Industries Ltd. It currently owns refineries at Mumbai (12 million tonnes a year capacity), Kochi in Kerala (15.5 million tonnes a year capacity), and Bina in Madhya Pradesh (7.8 million tonnes). In the aborted privatisation plan, it lost a fourth refinery to Oil India Ltd.

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BPCL had to give up its Numaligarh refinery in Assam to Oil India Ltd. when the government attempted to privatise the company. The transfer was to keep the Numaligarh unit within the public sector to honour the Assam Accord. However, BPCL privatisation was aborted due to a lack of interest by bidders.

The planned unit in Andhra Pradesh is touted as India's last greenfield refinery project. BPCL is part of a consortium pursuing a 60 million tonnes a year refinery-cum-petrochemical complex on the west coast of Maharashtra, which was conceived six years ago but has yet to get off the drawing board due to land acquisition woes.

India's oil demand is growing at 4-5 per cent annually. The new refinery shows the country's confidence in fuel demand growth even as electric vehicles are eroding sales of oil consumption in China. India's nearly two dozen refineries produced 276.1 million tonnes of fuel in 2023-24 fiscal (April 2023 to March 2024) while domestic consumption was 234.3 million tonnes. The rest of the products were exported.

It is being said that the planned expansion, the new unit at Barmer (likely to be commissioned next year), and the one BPCL is now looking at building on the Andhra coast will be sufficient to meet India's fuel demand until at least 2040.

India is also pursuing clean energy projects, including green hydrogen, shifting energy demand, especially in the transport sector, to electricity (EVs), gas (CNG/LNG), or green hydrogen. India has set 2070 as the target date to achieve zero carbon emissions. BPCL has lined up ₹1.7 lakh crore of investment to expand its core oil refining and fuel retailing business and invest in new energy ventures.

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"To meet the anticipated demand beyond our planned expansions in Bina and Kochi (refineries), we are actively evaluating options for setting up additional integrated refining and petrochemical capacities in the next 5-7 years," said Chairman G Krishnakumar at BPCL's annual shareholder meeting on August 30.

Building on a strong Indian energy presence, BPCL aspires to meet 7-10 per cent of the nation's primary energy demand by 2047. BPCL aims to achieve net-zero carbon emissions by 2040 by investing ₹1 lakh crore in renewable power, green hydrogen, compressed biogas, carbon capture, utilisation, and storage (CCUS), energy efficiency improvements, and carbon offsets.

It has set aggressive targets to build two GW of renewable energy capacity by 2025 and 10 GW by 2035. It is investing nearly ₹1,000 crore to establish two 50 MW captive wind power plants in Maharashtra and Madhya Pradesh and is also investing about ₹300 crore in 72 MWp of solar projects in Prayagraj, Uttar Pradesh.