The modernisation programme had originally been planned for 2022, with the refinery’s capacity to be increased by 31 % to 18 million tonnes of oil per year as well as construction of a butanol plant and an increase in the capacity of its linear alkylbenzene (LAB) unit by 20,000 tonnes per year to 160,000 tonnes per year – mixtures used in production of washing powders and liquids.

     The presence of petrochemical production in expanding the plant’s capacity appears to be no mere coincidence as India has one of the fastest growing petrochemical markets in the world. 

    In the period to 2030, demand for petrochemicals is to rise in India by an average of 5.8% per year, while in China the increase is forecast at 2.8 % per year, according to data from the International Energy Agency (IEA). This will boost demand for oil as one of the products of refining is nafta – the most widespread raw material in the petrochemical industry. The IEA forecasts that demand for oil in India from industry and for petrochemicals will rise by nearly 70 % compared to 2019 levels – from 0.9 million bpd to 1.5 million bpd.

    A similar increase is predicted in other sectors.

    In construction, demand for oil over this period is expected to rise 30 % (from 1 million bpd to 1.3 million bpd), in road construction by slightly more than 50 % (from 1.9 million bpd to 2.9 million bpd) and in air transport – it will double (from 0.2 million bpd to 0.4 million bpd).

    The driving force behind these developments is urbanisation. India lags behind China on this – according to the World Bank, 60 % of the population in China lives in cities, while in India, the figure stands at 34 %. A similar gap exists in terms of the share of industry in the added value structure – 25 % of GDP in India compared to 39 % in China. 

    Reducing that gap will stimulate front-end demand for petroleum products – all the more so as IEA forecasts show India behind China up to 2030 in the share of electric vehicles in new car sales (30 % against 60 %).