State-owned Indian Oil Corporation (IOC) will invest about Rs. 8,000 crore to expand capacity at its Koyali oil refinery in Gujarat to 18 million tonnes per annum by 2016-17.

The expansion from 13.7 million tonnes will “lead to improvement in distillate yield thereby enabling production of more value added products from the refinery,” a company statement quoted Gujarat Refinery Executive Director Gautam Roy as saying.

The increase in high sulphur crude processing capability will lead to improvement in refinery margins and profitability, he said. High sulphur crude oil made up for 51.5 per cent of the crude the refiner processed in 2012-13 and in first quarter (Q1) of current fiscal this has already gone up to 54.4 per cent.

The3 million tonne refinery at Koyali in Gujarat was commissioned in 1965. Over the years, the capacity of the refinery, which later came to be known as Gujarat refinery, was gradually increased to 13.7 million tons per annum.

To augment the operational reliability, the refinery is setting up a new gas turbine that will provide ensured power to the unit.

The statement said the Gujarat refinery has engaged DuPont - the global leader in employee safety, to sensitise employees about safe operation and bring about a cultural change in their behaviour towards safety. “The Rs. 20 crore Indian Oil-DuPont Safety Partnership for safety improvement is being implemented in IOC for the first time at the Gujarat Refinery.”

Gujarat refinery is IOC’s second biggest refinery behind its Panipat unit which has a capacity of 15 million tonnes. The company owns 9 refineries with a total capacity of 54.2 million tonnes per annum. It also owns Chennai Petroleum Corp Ltd (CPCL) which has an 11.50 million tonne unit near Chennai.

Besides Koyali, IOC is also looking at expanding its Haldia refinery capacity to 8 million tonnes from 7.5 million tonnes currently while also raising its Chennai refinery capacity by 0.6 million tonnes. It is also building a 15 million tonne new refinery at Paradip in Orissa, to be completed by 2015-16.

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