Demand for petroleum products and impact of west coast refinery coming up in maharashtra on other refineries

Abstract

Government of India has planned to set up an oil refinery of 60 MMTPA (million metric tons per annum) in Ratnagiri in Maharashtra. This is to be jointly operated by the three oil-marketing PSUs BPCL, IOCL and HPCL. The key products are High Speed Diesel (HSD), Motor Spirit (MS) and Superior Kerosene Oil (SKO). The key objectives of the project are to analyze the demand-supply scenario in Maharashtra and southern Indian states, identify demand centres and optimize product positioning & transportation. The focus is on certain districts in the interior of Maharashtra and Telangana state capital. Regression models were built using historical consumption as well as sales data and socioeconomic variables at both state and district levels. The supply scenario and proportion of projected supply that could be fulfilled by BPCL was generated. District-level demand for MS (Motor Spirit) and HSD (High Speed Diesel) for the year 2017-18 and 2018-19 was projected using the models. Based on the results, key demand centres i.e. 14 districts were identified in the focus states. A linear program was formulated in order to help optimize the product placement. Simultaneously, qualitative assessment was also performed to propose transportation routes for the petroleum products. The route proposed is to either pool supply at Mumbai or Pune and leverage the existing Mumbai-Pune and Pune-Manmad pipelines, while using new pipelines for the PuneHyderabad and Hyderabad-Nagpur routes, and servicing the flanking regions en-route with tankers based on the relevant cost structure. This study is an attempt to deepen the scope of prior pan-India studies on similar lines by identifying demand centres more precisely at district level, estimating supply and demand of key petroleum-based products, and proposing product-positioning solutions. While this was conducted for a limited number of states and products, this approach could be extrapolated to other product-market combinations.