Overview of Petroleum Oil Refinery in India
Crude-oil refining is essential for transforming crude oil into a marketable product such as automobile fuels(diesel and petrol), lubricants, and various other fractions of petroleum-like kerosene, waxes, bitumen etc. When we say petroleum oil refinery, we imagine big corporates that own oil wells and massive infrastructures like refineries, transport networks, cargo trucks, and access to international ports. However, refining crude oil does not need all of these. Extraction, transportation and refining are three distinct business activities. If the ownership of this resource is concerned, it lies with the state as per Article 297 of the Constitution, which declares petroleum in the territorial waters& continental shelf of India as a natural resource. However, the crude oil deposit in the country is significantly less and concentrated in a few regions. While extracting crude oil is a resource and capital-intensive business, refining it and supplying it to bulk or retail end users is not so much. Besides a refinery set up as per the SOP in the Petroleum Act 1934, which consolidates the laws relating to the storage, transport, production, import, refining and blending of petroleum, the refiner will also need a series of licences and authorisations to be able to have performed various activities and intermediate steps. For instance, petroleum exploration licences (PELs) and petroleum mining leases have to be adhered to if needed by the refinery. Also, the Petroleum and Natural Gas Rules 1959 ('PNG Rules') will be applicable, as the case may be. The Hydrogen Exploration and Licensing Policy (HELP), approved by the Central government in 2016 to enhance domestic oil & gas production, is another policy that directly affects the oil refining industry.
Government Policies towards Petroleum Oil refinery Industry
About 40% of the total petroleum oil refining is done by the private sector today. While there is a difference in the way private players negotiate and buy their crude oil requirements vis-à-vis their public sector counterparts. It is fact that private-sector refiners have more flexibility in their crude sourcing mechanism. For example, they are allowed to purchase oil from distressed cargo, which a public sector refiner cannot because of the stringent norms they have to follow. To spur domestic production and attract new entrants in the refining business, a large number of policies and initiatives have been undertaken, for instance- in the areas of generation of quality geoscientific data and providing easy access, finding future oil & gas by awarding new exploration acreage, expediting production from new development acreages and from existing production acreages and focus on production maximisation.
PertoleumRefining Process in India
As India imports around82-85per cent of its Requirement of crude oil from other countries, for any domestic oil refiner, the major portion of the raw material comes through imports. Crude oil is shipped to the refineries via pipelines, rail networks, trucks or ships. The second important activity in the refining process is the storage of crude oil. As the international market is highly vulnerable to world affairs, all oil refiners make a sizeable reserve of stock crude oil that can be refined, and A typical oil-refining process consists of processing units like distillation, cracking, coking, reforming, and post-treatment and refining of the products. The different products produced from Petroleum Oil Refinery include natural gas, Liquified Petroleum Gases (LPG), Propane, Butane, Hydrogen Sulfide, Naphtha Cuts, Kerosene, Diesel, Lubricants, Asphalt and Coke.
The refining process can involve one or more of the following stages
- Refining and Fractionation
- Atmospheric Distillation Column
- Vacuum Distillation
- Hydrotreating (Hydrogenation)
- Blending
- Reforming
- Isomerisation
- Alkylation
- Steam Cracking
- Fluid Catalytic Cracking
- Gas Sweetening (Hydro-desulfurization)
- Coking
Waste Generation from Oil Refinery
The Petroleum Oil Refinery requires large amounts of thermal energy and releases significant amounts of CO2 from different sources in the process. The wastewater from the refining of petroleum consists of cooling water, water from processing, stormwater, and sanitary sewage water. A large portion of the water used in the refining of petroleum is used for cooling purposes. This water can be recycled over and over. It typically does not come in direct contact with refined oil streams and therefore contains less contaminant than process wastewater. However, it may contain oil contaminants due to leakage in the refining equipment. Water used in refining operations accounts for a significant portion of the total wastewater.
Licences and Authorisations needed for setting up Petroleum Oil Refinery
Environmental Clearance for Petroleum Oil Refinery: As exploration activities and projects in the oil refining sector have been moved to Category B2 in the EIA Notification of 2006, refiners who may need exploration rights for oil now require environmental clearance (EC) only from the states concerned. The documents required in this regard are
- Detailed Project Description (the name of the project, proposed breakup of area, water requirement, waste generation, location etc.)
- Site/ Layout plan
- Proof of installed machinery
- Proof of Land Ownership
- ID proof of Signatory
- Quality test Report (wherever applicable)
- Proof of mitigation options adopted
- Proof of Electricity and water connection
Pollution NOC for Petroleum Oil Refinery: Pollution NOC is required by any manufacturing facility that emits industrial waste and air discharge in the process. Consent to Establish (CTE) and Consent to operate (CTO)is required by a petroleum oil refinery under Air Act and Water Act. The documents required at this stage include
Documents Required for CTE
- Duly-filled online Application Form
- Signed Undertaking
- Site Plan or layout plan
- Detailed Project Report
- Layout plan
- Details of finished products
- Details of the manufacturing process, including a list of machinery
- Land Ownership documents such as rent /lease agreement
- Industry Registration Proof
Documents required for CTO
- Duly filled Application form
- Balanced Sheet Certified by a CA
- Copy of CTE issued
- Details of air and water pollution control devices and solid waste / hazardous waste management facilities( provided their location on the premises, capacity and exit points of the discharge)
- Copy of land-related documents
- Consent fee (as applicable)
- Laboratory analysis report of the trade effluent and emissions.
- Environmental clearance
Other Licences Required by Petroleum Oil Refinery
- Authorisation for hazardous waste / solid waste
- Building plan approval from the Municipality
- Water supply sanction and connection from ULBs
- CGWA NOC for Water Abstraction
- Factory Licence
- Fire NOC (No Objection Certificate)
- GST Registration
- Explosive license
Licences to Process Refine, sell or Export: The Petroleum Rules, 2002 contains the requirements and restrictions that apply to the refining and processing of oil and gas issued. These rules require prior approval by the chief controller. The rules also mandate that permission to carry out maintenance or repair work should be obtained in writing in compliance with the Oil Industry Safety Directorate.
Licences to transportation store distilled Petroleum products
The Petroleum & Natural Gas Regulatory Board Act ('PNGRB Act') and the Petroleum Rules 2002contain the rules governing the transport, storage and import of petroleum. The PNGRB regulates the transportation of oil through pipelines in accordance with the PNGRB Act. Also, the Petroleum and Explosives Safety Organisation regulates transportation by land and water under the Petroleum Act and the Petroleum Rules, 2002. The grouping of petroleum products for storage is based on the product classification (Class A/B/C). The refining unit will also need a License for the storage of petroleum, diesel and naphtha from the District Collector. The Documents required in this regard are
- SSI / IEM / LOI / EOU Registration
- Affidavit on Rs.10/- (Notary)
- Site Map
- VAT certificate
- Copy of the letter issued by the Oil Companies
- Sale Deed/Rental Deed
- Explosive license
Market Analysis of the Petroleum Refining Industry
With a share of 5.7% of the world's primary energy consumption, India's energy requirement is fulfilled primarily by Coal, Crude Oil and Natural Gas. Petroleum and natural gas play an important role as over one-third of the energy required by the country is met by these crucial fuels. The Government of India is determined to promote the Petroleum Oil Refinery across the country. Oil demand in the country is estimated to grow twice the current rate to reach 11 million barrels per day by 2045,while demand for diesel is expected to double to 163 MT by 2029-30. Diesel and gasoline demand will cover 58% of India’s oil demand by 2045. As the Government has allowed 100% Foreign Direct Investment (FDI) in upstream and private sector refining projects, the industry expects huge opportunities in future.
Minimum Requirement to sell petrol/ diesel
If the refinery chooses to directly retail petrol and diesel to consumers(in retail or bulk form), they will need authorisation from the central government to do so. The government, in 2020, announced that entities with a net worth of at least Rs. 500 crore only are eligible for applying for the liberalised licence to sell diesel and petrol to retail and bulk consumers
How can Enterclimate assist you?
|
Personalised assistance for your business setup Our legal professionals, CAs and CS, provide an all-inclusive and personalised licencing and authorisation service along with the needed legal assistance for your Petroleum Oil Refinery setup. So setting up an oil refinery is a hassle-free experience with government and environmental authorities in any part of the country. |
End-to-End Guidance Enterclimate offers comprehensive guidance at every stage of setting up your oil refining unit. Our team of experts have more than ten years of experience in assisting similar industries. We proactively streamline and manage the application process and keep you updated with any changes in government policies concerning your business. |
Cost-effective solution for all business needs Our client relation experts are trained professionals with the eagerness to provide industry-leading assistance services. We provide comprehensive and expert assistance for any doubts and queries of the client speedily and efficiently. |
