India’s state-owned refiners’ multi-billion dollar investments in refinery expansion is likely to make India a net importer of fuel oil.

The nation is a net exporter of fuel oil. However, the state-owned refiners’ plans of upgrading their refinery to improve its production of fuel could turn the nation into a net importer of fuel oil.

Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum aim to invest USD 20 billion in refinery expansions to add units by 2022; which in turn will result in processing fuel oil into gasoline and diesel, improving the output to meet the growing local demand for transport fuels.

Reliance Industries and Essar Oil have already made an investment in upgradation of refineries which manufacture gasoline at the expense of fuel oil.

Consequently, the price difference between fuel oil and diesel can narrow further from USD 17.61 a barrel at present.

Indian Oil Corporation is planning to make an investment of USD 7.48 billion by 2022 to increase the refining capacity by around 30 percent to 2.08 million barrel per day. This includes Panipat refinery expansion to around 4,00,000 to 5,00,000 barrel per day.

HPCL and BPCL are also aiming to expand the capacity of their refineries and set up fuel oil upgrading units, halting fuel oil output in almost all of their units with an investment of USD 11.25 billion.