Reliance Petroleum Limited has announced the commissioning of its export refinery at a special economic zone at Jamnagar, in Gujarat.
The new refinery has been completed in 36 months from concept to commissioning. RPL achieved the milestone by leveraging the project management skills of the Reliance group together with world-class implementation partners like Bechtel, UOP and Foster Wheeler among others.
The refinery has been completed on schedule with a minor cost over run of Rs195 crore; Reliance spent Rs25,755 crore on the project as of 30 September 2008, compared with its earlier estimate of Rs.25,560 crore.
With a daily crude oil processing capacity of 580,000 barrels, the Reliance Petro refinery ranks as the 6th largest in the world and is also amongst the world's most complex with a Nelson Complexity Index of 14.0.
The new plant is situated adjacent to Reliance's older plant that has a higher refining capacity of 660,000 barrels. The two plants together will be the world's largest refining complex. RPL refinery will be one of the most complex refineries.
The project was conceptualised in December 2005 and the construction started in April 2006. RPL commenced its crude processing yesterday, while the secondary processing units are now under synchronisation and commissioning that will enable the entire refinery complex reach full capacity.
On completion, the RPL refinery will have the ability to process heavy and sour crude oil and also produce value-added products, meeting the highest quality specifications in the world.
While releasing the company's financial results in July 2008, chairman Mukesh Ambai had said, "Asia and West Asia will be contributing 60-70 per cent of the incremental demand. Our refinery will be well positioned to supply to these markets too. For diesel, which is in high demand at the moment, Europe appears to be the most attractive export market. The most important markets for gasoline will be the US, Africa and West Asia. The RPL refinery will earn foreign exchange for the country by exporting its superior quality products to the American, European and Asian markets. It should increase global production capacity of both gasoline and diesel by around 1 per cent."
A number of other large-scale greenfield export refineries were announced in West Asia and Asia, when RPL first announced its refinery project in 2005.
"RPL will be the first off the mark with a multi-year lead over other greenfield refineries. This will give it a huge advantage," Ambani had said.
Moreover, Reliance's location close to the Middle East gives it and advantage over competitors.
The commissioning of the RPL refinery catapults Reliance into the league of the largest refiners globally, both in terms of complex refining capacity and earnings potential.
With the completion of the RPL refinery, Jamnagar has emerged as a global refining hub with the largest refining complex with an aggregate refining capacity of 1.24-million barrels of oil per day in any single location in the world.
For tax reasons the new plant was not expected to begin significant exports until the new financial year commencing April 2009.
The only dark cloud is the worsening financial crisis and global recession would dampen the demand and prices for oil, forcing the company to scale down its expected revenues from the new refinery.
Moreover, the refining sector could be in for a difficult phase as China builds new plants quickly enough to meet its own demand while India and the Middle East vie for shrinking export markets.