The greenfield vs brownfield conundrum: India’s refining capacity expansion strategy
Editor Manoj Sharma editor@refiningindia.com +91 989 9077 595 Managing Editor Rachel Storry
rachel.storry@emap.com tel +44 (0)7786 136440 Editorial Assistant Lisa Harrison lisa.harrison@emap.com Graphics Peter Harper Business Development Director Paul Mason info@decarbonisationtechnology.com tel +44 844 5888 771 Managing Director Richard Watts richard.watts@emap.com
India, the world’s third-largest oil consumer and a major refining hub, faces burgeoning energy needs owing to rapid industrial development, urbanisation, and increased vehicle ownership. With domestic demand for refined petroleum products growing at an annual rate of 3% to 4%, plans are
under implementation to expand the current national refining capacity of around 257 million tonnes per annum (MTPA) by 20-25% by the year 2030. For the next decade, there are projections to expand this refining capacity to 450 MTPA to make India a major global refining hub. This vision forces the refining industry to evaluate two strategic pathways: the pragmatic, incremental approach of brownfield expansion and the ambitious, transformative path of greenfield development. The choice will affect not only the immediate cost and timeline but also the long-term competitiveness of the sector. Appeal and constraints of brownfield expansion Brownfield expansion, which involves upgrading, debottlenecking, or expanding existing refinery sites, has become the default strategy for most Indian refining companies. Its appeal is rooted in practical economics and logistics. Companies benefit immediately from leveraging established infrastructure, including storage tanks, power utilities, pipelines, and crucial port connectivity. This utilisation of existing assets significantly reduces initial Capex and the time-to-market, offering quicker returns on investment and a lower risk profile for managing capital. Recent industry data suggests that more than 80% of the planned new capacity in the near future is expected to come from such incremental brownfield additions. This is seen as a ‘quick win’ approach, allowing refiners to swiftly capture rising gross refining margins (GRMs) during periods of high demand. However, this approach faces severe technical and operational constraints. Brownfield sites are often space- constrained, limiting the integration of advanced process units and efficient layouts. A few ageing and small-capacity wellhead refineries will have limited capacity for expansion. The main challenge is the execution of construction near live hydrocarbon units, known as simultaneous operations (SIMOPS). This environment mandates strict safety protocols, extensive permitting within the operating facility,
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Cover Story Future-proof strategy for expansion. Courtesy of IOCL.
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