India's state-controlled refiner HPCL can process Venezuelan crude but is not looking to buy cargoes as it stabilises operations at its 301,000 b/d Vizag refinery following upgrade work, chairman and managing director Vikas Kaushal said.
"HPCL has not handled Venezuelan crude in the past, but recent upgrades mean the [Vizag] refinery can now process heavier grades," Kaushal told Argus on the sidelines of India Energy Week in Goa on Tuesday. For now though, Vizag is keeping to its traditional Basrah Medium and Basrah Heavy slates from Iraq, he added.
"We have the capacity now, which we did not have earlier. But right now our focus is to stabilise the unit. Handling a large refinery is complex, so we are running regular, tried-and-tested crudes," Kaushal said, adding that stable performance is expected by the end of March.
HPCL has been modernising the Vizag refinery to improve flexibility, including the ability to process heavier grades. Kaushal said. HPCL would consider Venezuelan crude if it becomes available, but stressed that the refiner is not actively seeking any at present. "As and when it is available, we would look at it. But we are not scouting for a cargo right now because our focus is on stabilisation," he said.
The residue upgradation facility at Vizag enhances the plant's deep-conversion capability, distillate output and profitability, HPCL has said previously. The 3.55mn t/yr unit is India's first residue hydrocracking facility and the world's first LC-Max unit, capable of converting about 93pc of low-value residue into higher-value products. HPCL expects the facility to raise distillate yields and improve gross refining margins.
Fellow Indian state-run refiner MRPL and privately-owned Reliance have previously expressed interest in buying Venezuelan crude as an alternative to Russian supply.
Trading firms Trafigura and Vitol, which have been engaged by the US to market 30mn-50mn bl of Venezuelan crude held in storage, have in the past week offered cargoes to the US market at a $9/bl discount to Ice Brent on a delivered basis, and to Chinese buyers at a $5/bl discount, market sources said. Cargoes to Europe were offered at around a $6/bl discount to Ice Brent on the same basis, they added.
Separately, HPCL is preparing to begin pre-commissioning of its new 180,000 b/d Barmer refining and petrochemical complex in Rajasthan in the coming weeks, Kaushal said. The refining section is expected to be fully commissioned this quarter, but the petrochemical unit is expected to take longer.
"Once complete, the Barmer facility will be a state-of-the-art, fully integrated complex with the flexibility to handle heavier grades, similar to Vizag," he said.
HPCL will seek to import Middle East crude grades for Barmer alongside its current intake of domestic Mangala crude, Kaushal added.
