MINISTRY OF PETROLEUM & NATURAL GAS IS UNDER OVERHAULING THE POLICIES FOR BEST PERFORMANCE . Import of VGO by RIL to produce petrol-I: Problems crop up with regard to fixation of Standard Input Output Norms July 4: The petroleum ministry and the Centre for High Technology (CHT) have been splitting their hair over fixation of Standard Input Output Norms (SION) for import of Vacuum Gas Oil (VGO) as against export of petrol (MS). 8The need for fixation of SION for import of VGO was felt after RIL made a request to the petroleum ministry seeking grant of an Advance Authorisation (AA) for import of VGO so that it can produce motor spirit (MS) from the imported VGO and then export the produced MS. 8The task of fixation of a standard norm becomes difficult in light of the fact that while VGO is recognized as a middle distillate, MS (also called gasoline) is a light end yield product both falling under petroleum oils and oils obtained from bituminous minerals. 8RIL currently produces MS from VGO in its Fluidized Catalytic Cracking Unit (FCCU). The FCCU is designed to process the hydro-treated VGO from which gasoline streams are generated and MS (gasoline) is extracted from the gasoline treating units. 8In absence of technical specifications of VGO, the correctness of input-output norms is not easy. 8The benefit of getting the Advance Authorization is that with this the company will be able to import VGO without paying any duty. 8The company plans to export of 35000 MT of Motor Spirit (MS) produced from the imported VGO. 8Since the standard input-output norms are not available for import of VGO for manufacture of MS under the Import Export policy, RIL has submitted the application for fixation of self declared norms. In other words, the AA has been sought on a self declaration basis. 8The two methods suggested by RIL for calculation of SION for import of VGO against export of motor spirit have already been rejected by the Centre for High Technology (CHT). (Click on Details for more information) Details Import of VGO by RIL to produce petrol-II: CHT rejects two methods suggested by RIL for fixation of input-output norms July 4: The two methods -- Method-I and Method-II -- for calculation of SION for import of VGO against export of motor spirit have been rejected by the Centre for High Technology (CHT) on the following grounds: Method-I 8Under Method-I, SION A-2688 (which allows 1.265 MT of crude oil against export of 1 MT of MS) and SION A-2689 (which allows 1.072 MT of crude oil against export of 1 MT of VGO) are combined together to arrive at the quantity of VGO required to be imported against export of 1 MT of MS. 8Under this method, RIL has suggested 1.18 MT (1.265/1.072) of VGO against export of 1 MT of MS. 8The CHT which was asked to examine the proposal has rejected this method on the ground that crude oil processing in not at all involved in the VGO conversion to MS. Under this method, only one process, that is, processing of VGO to produce MS is involved. VGO is not an input in either SION A-2688 or SION A-2699. 8Then again, the CHT has argued that combining SION A-2688 and SION A-2699 is not justified in this case since the fuel & loss (wastage) credit, separately given under the two norms, will get accounted twice for a single process. Method-II 8Under Method-II, RIL has calculated the total quantity of output products by normalising quantity of each of the products to MS equivalent considering the annual average prices (January to December 2013) of various products produced from VGO. 8Under this method, the net quantity of MS equivalent products (excluding coke and offgases) works out to 84.99 MT per 100 MT of VGO input and the company has accordingly suggested import of 1.177 MT (100/84.99) of VGO against 1 MT of MS. 8The CHT has rejected this method too saying that as per the DGFT guidelines, the methodology for developing Input-Output Norms should not be based on economic ratios or product prices. (Click on Details for more information) Details Import of VGO by RIL to produce petrol-III: CHT recommends import of 1.11 MT of VGO against export of per MT of MS July 4: After rejecting the two methodologies suggested by RIL for fixation of Standard Input Output Norms (SION), the Centre for High Technology (CHT) has suggested its own methodology which is as under: 8As MS and other high value products like propylene are the principal output accounting for about 54% in the overall product mix, the process of converting VGO to MS should be considered. 8Credit should to be given to compensate for the fuel & loss (wastage) which is incurred during the process for working out the input-output norms. 8Similar methodology was employed for working out SION for HSD/VGO from crude. 8Considering the loss (wastage) towards coke and offgases at 10.0% wt. on feed as indicated in the yield pattern given under Method-II, the quantity of net products under this methodilogy will work out to 90 MT per 100 MT of VGO. 8Accordingly, the equivalent VGO will be 100/90, that is, 1.11 MT of VGO will be required to be imported against export of one MT of MS. (Click on Details for more information) Details Import of VGO by RIL to produce petrol-IV: IOC sides with RIL July 4: Even though the Centre for High Technology is keen on imposing a different input-output norm for conversion of VGO to MS, Indian Oil Corporation (IOC) has found the RIL formula to be quite in line with industry practice. 8IOC also said that self declaration of norms is allowed under the Handbook of Procedure for Advance Authorization and RIL is right in seeking a ruling under it 8Since SION for requirement of VGO to manufacturing of MS does not exist, the RIL submitted the yield pattern from its FCC. The FCC yield pattern as provided by the party is feasible under high severity operation. Based on this FCC yield pattern, the Input-Output ratio of VGO vs MS comes out to be 1.18 (when outputs are converted to MS equivalent based on realisable value). 8RIL has also shown that the same ratio can be arrived at by combining the accepted SIONs of crude oil to MS (SION A2688 - 1.265 MT of Crude Oil) and crude oil to VGO (SION A2689 - 1.072 MT of Crude Oil). In view of above, the ratio of VGO to MS proposed by the company at 1.18 appears in order, and we do not have any adverse observation on the same, RIL said.
Posted on: Mon, 07 Jul 2014 04:02:35 +0000
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