Roads to this semi-arid Gujarat district, south of the Gulf of Kutch, reverberates with hundreds of trucks all through the day as Reliance Petroleum Ltd (RPL) races ahead with the construction of a hi-tech refinery that will put the remote region in western India firmly on the world energy map.
"The civil construction work of the $ 6 billion project is currently running several weeks ahead of schedule," according to Hital R Meswani, executive director of Reliance Industries Ltd (RIL), which holds around 80 percent stake in the new project.
"Once the new refinery in the special economic zone is completed, together with our existing refinery here, ours will be the largest greenfield refinery in the world with 1.24 million barrels per day capacity," Meswani told a group of visiting journalists.
"It will put India on the world energy map. It is a refinery based in India but meant for the West. Reliance's new refinery will be one of the 30 odd refineries worldwide that would be designed to handle any kind of crude," he said.
Presently ranking as the third largest refinery in the world, Reliance will occupy the top slot once the new refinery coming up in the same complex (though in a portion earmarked as special economic zone) is commissioned by December 2008, beating present leaders in Venezuela and South Korea.
Reliance Petroleum Ltd (RPL) is currently in talks with its foreign equity partner US energy major Chevron Corporation for firming up terms of cooperation for sourcing crude, marketing petroleum products and technology input.
The details of a memorandum of understanding signed with Chevron, which has taken five percent stake in the project and has option to take another 24 percent, is presently being worked out, said Meswani.
The new refinery with 580,000 barrels per day capacity is being geared to handle the sourest of crude (API 24), but with lighter crude, the plant would be able to handle up to 660,000 barrels per day.
Reliance's current 33 million tonnes refinery and petrochemical unit at its Jamnagar complex handles 660,000 barrel per day of heavy or sour crude (up to API 27) and is presently exporting most of its products with margins of around $ 12 per barrel, which is three to four dollars more than the global best.
Being designed to produce the highest Euro IV grade petroleum products, RPL sees good potential to export petrol to the US and diesel to Europe. Reliance currently supplies various petroleum products to almost 30 countries including in the Middle East.
Considering that both the US and Europe have not set up any new refinery in the last few decades, RPL sees good demand for its products.
Looking to further improve its margins, the new 27 million tonnes plant would have the largest facility for making alkylate, a premium gasoline blending stock, and also polypropylene capacity of 0.9 million tonnes, said Meswani.
"Considering that our product slate will be more, we should be earning higher margins than in the present refinery," he said, stating that study into further value additions are being looked into through best of technology inputs.