Fossil Fuels demand will continue to grow until 2040: MK Surana, HPCL

MK Surana, Chairman and Managing Director, Hindustan Petroleum Corporation Limited (HPCL), spoke about the challenge that OMCs will have with EVs, development of Barmer project and marketing margins of the company during an interview with Zee Business’s Anurag Shah. Edited Excerpts: 

Q: Don’t you think that EVs, that will be ruling the roads by 2030, will have an impact on the expansion plans of the OMCs? 

A: Experts suggest that the demand for petroleum fossil fuels will continue to grow till 2040 and 2040 can be a pick year for demand. The pick will be supported by non-penetration of EVS at present. It is being said that it, EVs, can create a demand for itself by 2040 and can have a certain impact on the demand for fossil fuel. Otherwise, EVs can take a fraction of the incremental demand but will not be able to suffice the required demand.

If seen in that aspect than there is a requirement of additional refineries till 2040. It is a transition period, where people are talking about what if EVs will be able to penetrate in the way as being thought than what will happen and what will happen if it doesn’t happen, and it should be managed. 

The projects are based on the projections of various agencies, which talks about the incremental requirement of refineries. 

Q: Throw light on the progress on HPCL’s Barmer project?

A: Work on Barmer refinery is in progress and the licensor agreements have been finalised and a commitment for about Rs9000 crore has been done. And, work on preparation to go for the F-stage before has been finalised for all licensing unit. Base activities, like grading, boundary wall, reservoirs, construction water, construction power and warehouses has been started and we have invested around Rs600-700 crore in the process. 

Q: Did the fall in crude prices had any impact on marketing margins of the company?

A: It is a changing scenario in which the crude prices has reached its peak of 86$/barrel and then fell below 60$/barrel and now is standing at 61$/barrel. So, the situation will keep changing. Market margins are dependent on international prices and are just not depend only on crude prices, but it also depends on cracks. So, marketing margins will be aligned in accordance with situational changes. 

Q: Put a light on the existing situation of Gross Refining Margins (GRMs)?

A: We can’t term it as a huge fall as GRM depends on product cracks and a bundle of products like MS cracks which was low in recent past. But, low LPG and MS crack has an impact on GRMs but low crude prices benefit the fuel losses. 

Q: Let us know about HPCL’s contribution to Ujjawala scheme, which has reached a mark of 6 crore connections?

A: Normally, HPCL has a contribution of 25 per cent share in the scheme. Thus, 1.6 crore connections have been given by us. 

Q: Can OMCs bear the burden of a subsidy if a new subsidy is announced by the government?

A: The situation is not visible at present due to the crude prices, which is low.