Indian Oil Corporation has announced plans to commission major refinery projects during 2009.

Reports quoted B N Bankapur, IOC's director for refineries, as saying that projects scheduled for commissioning during this year include the expansion of the Panipat Refinery, a naphtha cracker complex adjacent to the Panipat Refinery, and hydrocracker project at Haldia.

He said capacity at the Panipat Refinery would be expanded by three million tonnes to 15 million tonnes, and a naphtha cracker complex adjacent to the unit would be commissioned this year, as would be a once-through hydrocracker project at Haldia.

Terming 2009 as the 'Year of Commissioning' for IOC, Bankapur said that IOC remained committed to complying with the government's Auto Fuel Policy, and accordingly, petrol and diesel quality for Delhi and the national capital region and 12 other cities would be in accordance with Bharat Stage-IV norms starting 1 April, 2010.

Presently, these regions are BS-III stage compliant, while the rest of the nation uses BS-II fuel. The new policy will see the rest of India shift to BS-III fuel.

IOC's refineries had a capacity utilisation of 104 per cent in 2008, processing 48.9 million tonne of crude oil.

Amidst this expansion, public sector oil marketing companies are gearing up to face some competition from private sector players who had exited the petroleum distribution business at the height of the oil price spike last year.

Oil prices having come down from $147 per barrel to their current levels of around $40 per barrel have accorded some degree of economic viability to petro-retailing for the private sector, which does not have the option of benifiting from the subsidies given by the government to the public sector oil marketing companies.

IOC is reported to be closing loss-making fuel stations, while focusing on increasing throughput. It also plans to garner market share through non-fuel business at its petrol pumps besides setting up new pumps in high-potential areas.

Essar Oil is reported to have expanded the number of its fuel retail outlets to over 1,000, with plans to have around 1,400 outlets operational by April 2009. Unconfirmed reports said that Essar claimed a market share of around four per cent, and was aiming to increase it further to over six per cent.

Global petroleum major Shell, which has a petroleum retail licence for 2,000 retail outlets in India, currently has only around 50 outlets selling diesel and petrol. Shell India Marketing is reported to be implementing its parent Shell India's retail initiative, having earmarked Rs250 crore for the first phase of its retail operations.

Reliance Industries Limited last week matched the refining capacity of India's largest refiner IOC, at 1.2 million barrels per day by commissioning the world's sixth-largest refinery at Jamnagar.

It is awaiting a deregulation of petrol and diesel prices before restarting its petroleum retail network, to which the government has reportedly accorded an in principal approval following the crash in crude oil prices. In 2006, with its 1,200-odd retail outlets, Reliance had captured over 14 per cent of the market from the oil marketing companies.

However, Reuters reported that India's refinery output had dropped 1.1 per cent in November on a year- year comparison with the previous year, marking the first annual drop in three years.

This was attributed to the planned shutdown of an IOC refinery and lower demand in a slowing economy. It said that data from a week ago showed that domestic oil product sales increased a mere two per cent in November, reflecting weak demand in a faltering economy. It said crude processing at IOC's Panipat refinery was down 22 per cent in November, with almost half the unit shut for most the better part of the month on account of routine maintenance.