Indian Oil Corp (IOC), the nation’s largest oil firm, plans to raise processing of cheaper crude oil varieties to 30 per cent by 2017-18 as part of its efforts to improve margins.
In 2013-14, IOC, which owns 30 per cent of the nation’s oil refining capacity, turned 54.65 million tons of crude oil into fuel. Of the crude oil processed, 16.1 per cent was heavy and high TAN (total acid number) crude.
Heavy crudes, like the one produced in Latin America, are cheaper than most of the varieties available from the Middle-East as they have high concentration of sulphur and several metals, particularly nickel and vanadium, which require higher grade refineries for processing. Same goes for high acid crudes or high TAN crudes.
“The Corporation sees optimisation of refinery operations as a major strategy for margin protection and enhancement. Since crude oil cost constitutes as high as 95 per cent of the input cost, reducing cost of crude oil has been a priority area,” IOC said in its latest annual report.
In pursuit of this plan, IOC has been enhancing capabilities of its refineries to process cheaper crude varieties as well as initiated action to provide optimum crude mix to refineries.
“During 2013-14, the Corporation’s refineries processed 16.1 per cent heavy and high TAN crudes vis-a-vis 11.5 per cent in 2012-13. Plans are afoot to raise this proportion to 20 per cent by 2015-16, and 30 percent by 2017-18,” it said.
To leverage the capability of processing tougher crudes, high sulphur crude has also increased from 44.3 per cent in 2009-10 to 53.7 per cent (including Mangla crude from Cairn’s Rajasthan fields) in the year 2013-14.