Bharat Petroleum Corporation Limited (BPCL) has received Board approval to begin pre-project activities for a greenfield refinery and petrochemical complex in India’s Andhra Pradesh. The estimated cost of the project is Rs. 6,100 crore (approximately $71.63 billlion).

Though BPCL has not yet disclosed the precise capacity, timeline, and location of the project, it is understood that the company is exploring potential sites in Machilipatnam (Krishna district), Ramayapatnam (SPSR Nellore district), and Mulapeta (Srikakulam district). BPCL is likely to set up the complex on a 1,000-acre site with an estimated capacity of 12 million tonnes per annum.

The pre-project activities, which are expected to lay the foundation for the complex include conducting initial studies like land identification and acquisition, preparation of a detailed feasibility report, environmental impact assessment, and designing the engineering plans. BPCL is focusing on a systematic approach to ensure a smooth execution of the project, which will eventually add significant refining capacity to the company’s portfolio.

BPCL’s current refining capacity is spread across three refineries—Mumbai (12 million tonnes per annum [MTPA]), Kochi (15.5 MTPA), and Bina (7.8 MTPA). However, the company’s refinery throughput has not kept pace with its sales, creating a gap. In FY24, BPCL’s crude throughput was 39.9 million tonnes, while its sales reached 51.04 million tonnes. To bridge this gap, BPCL has been purchasing approximately 5 million tonnes of refined products from private refineries and other standalone refineries annually. With increasing domestic demand, BPCL anticipates this gap to widen, prompting the need for new refining capacities.

BPCL’s decision to set up this new refinery and petrochemical complex is highly significant, not just for the company but also for the state of Andhra Pradesh. The project is expected to bring significant economic benefits to the region as it will create jobs and lead to infrastructure development.

In addition to increasing refining capacity, BPCL is also placing a strong emphasis on expanding its petrochemicals portfolio. The company aims to raise its share of petrochemical products from the current 1% to 6-7% in the near term, with a long-term goal of reaching 15% of total product sales. The proposed refinery and petrochemical complex in Andhra Pradesh will be integral to this strategy.

As part of its broader refining expansion strategy, BPCL plans to increase its overall refining capacity from the current 35.3 million tonnes per annum to 45 million tonnes per annum by 2028. This includes capacity expansions at its existing refineries in Kochi, Mumbai, and Bina. The company is also keen on exploring new oil grades to optimize its profit margins, including low-sulfur grades from South America.