MUMBAI // The world’s largest crude oil refinery, on the western coast of the Indian state of Gujarat, is spread over 3,035 hectares and has the capacity to process 1.2 million barrels per day (bpd).
The Jamnagar complex is owned by Reliance Industries, the Indian conglomerate controlled by the country's richest man, Mukesh Ambani. Through this sprawling network of pipes and metal structures, crude oil – much of which comes from the Middle East – is refined into products such as petrol, diesel, kerosene used for cooking, jet fuel for airplanes and liquefied petroleum gas (LPG), a household and industrial fuel. These products are then distributed across the country and exported globally.
India has rapidly expanded its capacity to refine crude oil over the past decade and the country has become a major centre for petroleum refining. And it is continuing to grow the sector.
There are plans to build a vast refinery in the state of Maharashtra, to be developed by the India Oil Corporation, Hindustan Petroleum Corporation and Bharat Petroleum, all state-controlled refiners. With a planned capacity of 1.2 million bpd, it is set to rival the Reliance plant. The first phase, which will have the capacity to refine 800,000 bpd, is projected to cost more than 1 trillion rupees (Dh54.6bn).
“India is emerging as a preferred refining hub,” says Mike van Croonenburg, the chief executive of Petrol Storage Broker, an independent broker based in the Netherlands. The slump in crude oil prices has hit refiners’ revenue, but at the same time is helping companies sell product, he says.
In terms of its total refining capacity, India ranks fourth globally, with only the United States, China and Russia ahead of it, according to the International Energy Agency (IEA).
As well as producing petroleum products for use within the country, India is a major exporter of refined products.
Its capacity has risen to 215 million tonnes a year in the financial year to March 2015, compared with 62 million tonnes in the financial year to March 1999, government data shows.
Out of 23 refineries operating in India, 18 are owned by state-run companies; three are in the private sector; and two are joint ventures, according to a report by the consultant Pricewaterhouse Coopers.
“The growth in refining capacity has transformed India from a net importer of petroleum products until 2000 to 2001, to one of the world’s largest exporters of refined petroleum products in 2014 to 2015,” PwC says.
But production of crude oil within India is very limited, which means the country is heavily dependent on imports – and this dependency is growing.
“The indigenous production of crude oil in India is not keeping pace with the increased refining capacity,” PwC says. “The challenge before Indian companies is to take effective measures for enhancing the exploration and production of petroleum resources. Simultaneously, the infrastructure for refining, distribution and marketing, import, export and conservation of petroleum products must be improved.”
India is the third-largest importer of crude oil, behind the US and China, and is dependent on imports for more than three-quarters of its supply. Its large refining industry is a major contributing factor in this.
The IEA projects that India’s reliance on oil imports will rise by 90 per cent by 2040, when crude imports will rise to 7.2 million bpd, second only to China, sourced predominantly from the Middle East.
“India’s refinery capacity is projected to rise steadily,” it says.
But the IEA adds, “Indian refiners face an evermore competitive product-export market”, with the Middle East expanding its refining capacity.
The agency says India is one of a few countries, along with the US and South Korea, to rely on imports of crude oil while also being a significant net exporter of refined products.
Its domestic crude oil production at 900,000 bpd is far less compared with its refinery capacity, at 4.4 million bpd.
Its expanded capacity in the sector has led to India having a surplus of refined products, the IEA says. India is a net exporter of all refined products, apart from LPG.
“India has been an important supplier of diesel to Europe and a regular supplier of transport fuel to the Asia Pacific and Middle East countries. Its exports come mainly from the private-sector refiners Reliance and Essar, while the public-sector refiners supply the domestic market.”
India is successfully competing with other countries in the refining space, according to the IEA.
“India’s more modern, privately owned refineries, which are capable of efficiently processing Middle Eastern oil into high-quality products, were able to gain market share from less complex refineries in Europe and Japan.”
India’s energy demands are being driven by factors such as the country’s large population, rising incomes, the expanding economy and a push to increase manufacturing.
“The refining sector plays an important role in energy security by ensuring the total energy demand for petroleum fuels is met from domestic and overseas supplies in a timely manner,” according to PwC.
Companies have ploughed investment into the sector to meet India’s future energy demands.
The expansion of refineries in the Middle East and India’s dependence on oil from the region has led India refiners to “sharpen their focus on improving their performance through modernising and upgrading their refinery configurations”, PwC says.
“In India’s economy, the refining industry plays an important part,” says Pradeep Gupta, the executive director of Jagson International, an offshore drilling company for oil and gas exploration in India. He says the Indian refining industry is set to continue its expansion.
“We expect the demand to accelerate in the 2016 through to 2017 time frame.
“As India’s transport and industrial sectors continue to expand under economic development, and because of the oil price declines and recent government policy initiatives to increase motorway and road infrastructure to promote Indian manufacturing, these factors will help demand grow.”
But India’s refining sector faces a number of challenges, experts say.
Mr van Croonenburg highlights that these include a lack of innovation and operational efficiency, as well as escalating project costs. Also, he points out that the effect on the environment of refineries, which leads to pollution, is another major area of concern.
“Many of the refineries in India are old and need a lot of investment to maintain efficient operations,” Mr van Croonenburg says.
“It is time to retire some of India’s old refineries and set up new ones with bigger capacities.”
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MATCH INFO
Newcastle United 2 (Willems 25', Shelvey 88')
Manchester City 2 (Sterling 22', De Bruyne 82')
RESULT
Esperance de Tunis 1 Guadalajara 1
(Esperance won 6-5 on penalties)
Esperance: Belaili 38’
Guadalajara: Sandoval 5’
Dunki
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UAE%20medallists%20at%20Asian%20Games%202023
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The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
The Year Earth Changed
Directed by:Tom Beard
Narrated by: Sir David Attenborough
Stars: 4
COMPANY%20PROFILE
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At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
Quick%20facts
%3Cul%3E%0A%3Cli%3EStorstockholms%20Lokaltrafik%20(SL)%20offers%20free%20guided%20tours%20of%20art%20in%20the%20metro%20and%20at%20the%20stations%3C%2Fli%3E%0A%3Cli%3EThe%20tours%20are%20free%20of%20charge%3B%20all%20you%20need%20is%20a%20valid%20SL%20ticket%2C%20for%20which%20a%20single%20journey%20(valid%20for%2075%20minutes)%20costs%2039%20Swedish%20krone%20(%243.75)%3C%2Fli%3E%0A%3Cli%3ETravel%20cards%20for%20unlimited%20journeys%20are%20priced%20at%20165%20Swedish%20krone%20for%2024%20hours%3C%2Fli%3E%0A%3Cli%3EAvoid%20rush%20hour%20%E2%80%93%20between%209.30%20am%20and%204.30%20pm%20%E2%80%93%20to%20explore%20the%20artwork%20at%20leisure%3C%2Fli%3E%0A%3C%2Ful%3E%0A
Stree
Producer: Maddock Films, Jio Movies
Director: Amar Kaushik
Cast: Rajkummar Rao, Shraddha Kapoor, Pankaj Tripathi, Aparshakti Khurana, Abhishek Banerjee
Rating: 3.5
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Analysis
Members of Syria's Alawite minority community face threat in their heartland after one of the deadliest days in country’s recent history. Read more
FROM%20THE%20ASHES
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The biog
Siblings: five brothers and one sister
Education: Bachelors in Political Science at the University of Minnesota
Interests: Swimming, tennis and the gym
Favourite place: UAE
Favourite packet food on the trip: pasta primavera
What he did to pass the time during the trip: listen to audio books
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, Leon.
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
TECH%20SPECS%3A%20APPLE%20IPHONE%2014%20PLUS
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The National's picks
4.35pm: Tilal Al Khalediah
5.10pm: Continous
5.45pm: Raging Torrent
6.20pm: West Acre
7pm: Flood Zone
7.40pm: Straight No Chaser
8.15pm: Romantic Warrior
8.50pm: Calandogan
9.30pm: Forever Young
The specs: 2018 Chevrolet Trailblazer
Price, base / as tested Dh99,000 / Dh132,000
Engine 3.6L V6
Transmission: Six-speed automatic
Power 275hp @ 6,000rpm
Torque 350Nm @ 3,700rpm
Fuel economy combined 12.2L / 100km
Disclaimer
Director: Alfonso Cuaron
Stars: Cate Blanchett, Kevin Kline, Lesley Manville
Rating: 4/5
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
GAC GS8 Specs
Engine: 2.0-litre 4cyl turbo
Power: 248hp at 5,200rpm
Torque: 400Nm at 1,750-4,000rpm
Transmission: 8-speed auto
Fuel consumption: 9.1L/100km
On sale: Now
Price: From Dh149,900
UAE currency: the story behind the money in your pockets
In numbers: China in Dubai
The number of Chinese people living in Dubai: An estimated 200,000
Number of Chinese people in International City: Almost 50,000
Daily visitors to Dragon Mart in 2018/19: 120,000
Daily visitors to Dragon Mart in 2010: 20,000
Percentage increase in visitors in eight years: 500 per cent