Oil Refining is a rather complicated business involving Demand & Supply, High Technology, Storage, Inventory Management, Logistics, Transportation, Crude Pricing at Placement and Product Pricing at Refinery Gate and a host of other factors. Coupled with the uncertain future of the use of hydrocarbons as an energy source, setting up of new Refineries is certainly not a priority in the economic landscape of most nations. But then India is India.
Its unique in many ways and is justifiably proud for being so. It’s one country where one Minister proclaims by 2030 no automobile will run on Petrol or Diesel; another announces a 20 MMTPA Oil Refinery in the state of Maharashtra.
The general public of India is quite used to political gimmickry and the (साँप भी मर जाये और लाठी भी ना टूटे) spirit, takes it in its stride. However, the Oil & Gas veterans, sit up and rub their eyes in disbelief, when a veteran honcho of an Oil behemoth of India, announces setting up of a Rs 1 Lakh Crore, 17 MMTPA, Refinery & Petrochemical complex in the most unlikely of places, Prayagraj, UP.
Many experts are alarmed at such an astounding revelation in mainstream media. What is also quite astonishing is that the proposed Refinery is to be set up with another independent Oil giant – BPCL.
Certainly, this was not on the windscreen of any expert. ONGC has its own downstream subsidiary HPCL. It also owns and operates Refineries with it. So going ahead with the announcement of BPCL as a partner is startling and even seems a bit catty. But for a scenarist media house like NewsIP, several obvious agendas spring up, on its cerebral scape.
Now, one must understand that Refineries in India are like Batashas, to be grabbed in the name of the political pantheon. Although the person who grabs the most feels understandably smug, others are however not allowed to denigrate.
It has been happening often in the past. Many Refineries came up in the hinterland of India not because of sound business sense but more due to political exigency. There is already a Refinery at Mathura in UP, owned by Indian Oil Corporation, for which crude oil has to be hauled all the way from the western cost by the Salaya – Mathura Pipeline and Products are dispensed through Mathura – Jalandhar Pipeline, Tank Lorries, Railway Wagons etc.
Now as per the conventional wisdom of Oil & Gas planners, Refineries are best located in the coastal areas. That’s the reason why most Western Oil Companies like Caltex, Burman Shell, Assam Oil etc. chose to set up coastal refineries or places near the crude oil source. Even the big modern private players in India today like Reliance and Nayara follow the same principle. Apart from the added costs like haulage etc., landlocked locations have issues of Population over runs, Safety, Environmental issues etc. Mathura Refinery has had its share of Fire Accidents and the Taj pollution case which went up to the Supreme Court. All this is fresh in the minds of people.
The idea of Refineries as bounties for the people of a state is actually a myth. The idea has run out of its life. Oil & Gas is a capital and energy-intensive industry and therefore employment opportunities for locals is not that great.
The land losers’ cases of Gujarat, Panipat, etc are still on even after so many years. Further, the effluent disposal for land locked areas is a nightmare. Farmers complain of loss of livestock and crops due to oil seepage.
The Oil Refineries may well become scarp in few years’ time as the progress of alternate energy sources is making speedy progress. Most companies are facing headache for alternate use of Oil Refineries. Now in India, the West Coast Refinery and Barmer Refinery are not able to give any products, this was possibly discussed in a review meeting in the parent Ministry. If the whole world changes to alternate sources, then Oil would certainly go out of business as fast as morning dew on a hot summer morning. All this, scream out for not putting up more Refineries in India.
NewsIP, did a few enquiries and was intrigued foremost by the fact that apart from ONGC no one seems to have much inkling about the Prayagraj Refinery. BPCL did not answer questions pertaining to the issue, despite reminders.
The parent Ministry has also maintained a discreet silence. Well, one educated guess could be that its person centric and possibly for a future nesting place. It’s also odd that ONGC having HPCL as a partner wants BPCL to assist. The land on which the Refinery is supposedly proposed is claimed to be owned by BPCL.
There could be filial corporate links playing up here. It’s also a fact that today ONGC – HPCL combined is a large and diversified company. It has interests in Oil, Gas, Petrochemicals and is already a formidable player. Although, it has not shown in market figures any substantial achievements of want it is capable of on paper. Is all this to put the investors off the trail? Is there actually attempts to bull up the market? Is some kind of insider trading citizens are not aware of? With suggestion of partnering with BPCL, is the intent to create a monopoly? India has had not a very pleasant experience with monopolies.
The 80s,90s refrain was for removing monopolies and now are we again thinking of reverting to it? These questions legitimately come to the mind of common public. They have a right to know since Taxpayers’ money is involved. The answers can help in untangling the web of secrecy which has gripped the sector. Being tight lipped raises speculations and kite flying.
India already has had its share of rough and tumble in Oil & Gas. Energy Predictions often have a habit of going sideways. But an obvious storm warning cannot be ignored. The powers-to-be and policymakers can become liable for informed culpability. Well, business judgements can be called out good faith also needs to be proven.
