MRPL shifts focus to chemicals, shelves refinery expansion

India's Mangalore Refinery and Petrochemicals has decided to cancel its planned refinery expansion in order to focus on increasing its petrochemical production capacity, which could amount to Rs 470 billion. The company is shifting its efforts towards boosting the production of chemicals used in plastics and paints, driven primarily by the changing energy landscape influenced by the growing popularity of electric vehicles. The company's main investment will be directed towards a new production plant in Karnataka. Indian and Chinese refiners, as well as major players like Exxon Mobil Corp., are placing their bets on petrochemicals to support future oil demand as the transition to electric vehicles gradually reduces the consumption of transportation fuels. The new MRPL plant is expected to become operational within the next three to five years. India, being a net importer of petrochemicals, is faced with a make-or-buy decision. There is a greater value in local production. MRPL was primarily owned by state-controlled Oil and Natural Gas Corp. (ONGC), plans to allocate approximately Rs 300-400 billion for the new plant, with an additional Rs 60-70 billion for smaller petrochemical units. This investment will help mitigate risks for MRPL's future during the energy transition. ONGC intends to spend a total of Rs 1 trillion to expand its petrochemical capacity to 8 million tonne per year by 2030, up from the current 3.4 million tonne. Also read: Focus on smaller refineries to overcome land acquisition challenges India’s oil imports down by 8.3% in April y-o-y