January 08, 2020

Indian Refineries Preparedness for BS VI Fuel Implementation from 2020

Stratas Advisors

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The government of India has decided to implement BS VI transportation fuel by April 1, 2020. Indian refiners are required to produce BS VI fuel for sale in India by April 2020. Indian refiners are currently making configuration changes. However, BS VI fuel is being supplied in national capital regions. The following chart displays the production of different type of gasoline grade from Indian refineries.

ivgasoline2020

 

The following chart displays the production of different type of Diesel grade from Indian refineries.

 

IV2020Diesel

 

The information in the table below includes the characteristics and implementation dates of different fuel standards in India.

 

2020DownstreamChart1IV

 

Notes:
(1) Indian Central government mandated compulsory usage of BS-VI vehicles from April 1, 2020, skipping the BS-V regime to curtail the growing pollution from transportation vehicles.
(2) Regular/Premium Gasoline.
(3) NCT: National Capital Territory (Delhi), NCR: National Capital Region (17 Districts & Agra City)
(4) BS stands for Bharat stage emission standards (BSES); emission standards instituted by Government of India to regulate the output of air pollutants.

Effects of BS IV to BSVI fuel transition are as follows:

 

  • Reduces air pollution.
  • An opportunity for Indian refiners to export gasoline and diesel in the global market, where Euro 6 fuel is accepted. In 2018 -19, India exported 34% of gasoline of its production (109 million barrels export), and 25% of diesel (high speed diesel, 208 million barrels export).
  • The addition of a new sulfur unit for this transition will open more sulfur production as a value-added product. As per Stratas Advisors’ Global Refining & Products, Refinery Sulfur Recovery Outlook  In 2019, India’s refinery sulfur recovery market is 12,980 TPD (tons per day).
  • There will be a threat to the refining margin. A switch to upgraded fuel would make diesel US $1.6-2 per barrel (Rs 0.7-0.9 paise a liter) more expensive, while gasoline will be US $2.7–3.4 per barrel (Rs 1.2-1.5 a liter) costlier, which will help refiners recover investment costs in upgrading its refineries to produce the cleaner fuel. However, the final decision on a price increase will be subjected to the government’s approval as a clean fuel duty or special cess.

The following table includes configurational changes in few Indian refineries for upgrading  transportation fuel from BS IV to BS VI. Most of these projects will be complete between December 2019 and January 2020. IOCL refineries in Panipat and Mathura have started supplying BS VI grade petrol and diesel before the original target date, April 2020. The total investment for this transition in India is US $4.3 billion.

 

ivchartdownstream2020

Source: Stratas Advisors

Abbreviations:
DHDS Diesel Hydro De-sulphurisation
SRU Sulphur Recovery Unit
NSU Naphtha Splitter Unit
NHT/NHDT Naphtha Hydrotreater
DHDT/DHT Diesel Hydrotreater
MS Motor Spirit
HGU Hydrogen Generation Unit
CCR Continuous Catalytic Regeneration
ISOM Isomerisation Unit

 
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