India's largest refiner, Indian Oil Corp (IOC), plans to invest Rs 4,000 crore (US$600m) to upgrade its 300,000 bbl/d (15 Mt/year) Paradip refinery in Odisha (India), in order to meet strengthened fuel quality requirements. The refinery will run at up to 60% of its capacity until March 2016 (some units have yet to come online and will raise the utilisation rate to 80%. IOC will operate the refinery at full capacity from the fiscal year 2017-2018, when its gross refining margins could go up significantly to US$12-14/bbl.
The Paradip refinery was commissioned in April 2015 and was designed to produce Euro IV and Euro V-compliant fuels. However, in November 2015, the Indian government decided to introduce Euro VI diesel and gasoline as of 2020 to reduce pollution. India has already introduced BS-III -the equivalent of Euro III specifications- and BS IV in large cities (to be soon extended to the whole country). Fuels meeting the Euro IV (Bharat State IV, i.e. 50 ppm sulphur) will be supplied throughout the country by April 2017 and BS-V or Euro-V grade fuel by April 2020: the Ministry is now considering switching over directly from BS-IV to BS-VI (10 ppm sulphur) by April 2020.
Overall, IOC plans to invest up to Rs 180bn (US$2.69bn) in six of its refineries to meet new fuel specifications; more than 70% of this amount will be used for facilities to produce Euro VI compliant fuels.