Company Overview

Mangalore Refinery and Petrochemicals Limited (NSE: MRPL) is Category 1 Miniratna Central Public Sector Enterprise (CPSE) under the Ministry of Petroleum & Natural Gas. MRPL is located in a beautiful hilly terrain, north of Mangaluru city, in Dakshina Kannada District of Karnataka State (India). The 15.0MMTPA (Million Metric Ton per annum). Refinery has got a versatile design with complex secondary processing units and a high flexibility to process Crudes of various API, delivering a variety of quality products. ¹

MRPL, with its parent company Oil and Natural Gas Corporation Limited (ONGC), owns and operates ONGC Mangalore Petrochemicals Limited (OMPL), a petrochemical unit capable of producing 0.905 MMTPA of Para Xylene and 0.273 MMTPA of Benzene. OMPL, situated in the adjacent Mangalore Special Economic Zone ( MSEZ), is integrated with the refinery operations. Para Xylene and Benzene products from OMPL are sold in the export market.

Shell MRPL Aviation Fuels and Services Limited (SMA) is a 50:50 joint venture between MRPL and Shell Gas B.V. (Shell), a step down subsidiary of Royal Dutch Shell Plc, Netherlands markets aviation turbine fuel (ATF) to airlines, both domestic as well as International carriers. SMA currently procures ATF from MRPL Refinery Complex and supplies at various airports like Bengaluru, Goa, Mangalore, Hyderabad, Chennai, Calicut, Madurai, Trichy, Coimbatore, Kannur etc. SMA enable Indian carriers fuelling requirement across International Airports.

History

Before acquisition by ONGC in March 2003, MRPL, was a joint venture Oil Refinery promoted by M/s Hindustan Petroleum Corporation Limited (HPCL), a public sector company and M/s Indian Rayon and industries limited(IRIL) (AV Birla Group). MRPL was set up in 1988 with the initial processing capacity of 3.69 MMTPA that was later expanded to the present capacity of 15.0 MMTPA. The Refinery was conceived to maximise distillates, with capability to process light to heavy and sour to sweet Crudes with 24 to 46 API gravity. On 28th March 2003, ONGC acquired the total shareholding of A.V. Birla Group and further infused equity capital of Rs.600 crores thus making MRPL a majority held subsidiary of ONGC.

Manufacturing Facilities

Crude and Vacuum Distillation Units:

The Atmospheric, Vacuum Distillation Units and Naphtha Splitter Unit designed by M/s Engineers India Ltd., are heat integrated, using Pinch Technology to achieve high-energy efficiency, thereby reducing Fuel Oil consumption and in turn reducing air emissions. ²

Hydrocracker Units:

The Hydrocracker Units produce high quality Sulphur free Diesel and ATF. The Plant is designed for 100 percent conversion of low value Vacuum Gas Oils to lighter, low Sulphur valuable products.

Soaker Visbreakers (Holland):

Shell Soaker Visbreaker technology under the Licence of ABB Lummus, Holland, has been adopted to upgrade heavy vacuum residue to Gas, Naphtha and Gas Oil. This is the first Unit in India to have Vacuum Flash column producing Vacuum Gas Oil, that is used for supplementing the feed stock to Hydrocracker Unit and extracting maximum value from short residue.

Platforming Units (USA):

The Continuous Catalytic Regeneration Platforming Unit (CCR), a State-of-the-Art Unit, produces Lead free, high Octane Motor Spirit (Petrol). Hydrogen produced as a by-product is used in the Hydrocracker Unit. The other by-product is LPG.

Merox (USA):

LPG Merox Unit reduces the Sulphur content in LPG. The kerosene Merox Unit converts mercaptans to disulphide.

Hydrogen (Denmark):

The Hydrogen Plants, produces Hydrogen by Steam Reforming of Naphtha. Hydrogen purity of 99.9 percent is achieved through the UOP Pressure Swing Adsorption (PSA) Unit. The design capacity of the plant is 70KTPA(97,293NM3/hr) of hydrogen. It has a prereformer and it is also designed for naturalgas as a feed stock. High purity hydrogen is produced by UOP pressure swing adsorption technology. Naphtha and FG can be used as fuel for the reformer. The reformer has total 360 burnerswith side firing. A separate Refinery off gas PSA installed within hydrogen plant will treat off gas from DHDT and CHT unit which recovers hydrogen and fuel gas. The fuel gas is exported to refinery fuel gas header.

Bitumen (Austria):

This Unit employs the highly efficient Biturox process given by M/s Porner, Austria to produce various grades of asphalt.

DCU (Delayed coker unit):

It is designed to process vacuum residue from the upstream vacuum distillation unit. The process , Licensed from M/s Lummus Technology thermally cracks and upgrades heavy fractions into more valuable distillate products and premium grade coke.

PFCCU (Petrochemical fluidized catalytic cracking unitand Polymer grade Propylene recovery unit) ( USA):

The PFCC unit processes unconverted oil from hydrocracker units, straight run low sulphur vacuum gas oil, hydrotreated heavy coker gas oil and converts into value added products such as propylene, LPG and gasoline.

CHTU (USA):

Coker heavy gas oil hydrotreating unit processes coker heavy gas oil generated by delayed coker unit.

PP unit (Polypropylene unit) (Germany):

Polypropylene, sold under the brand name Mangpol, is manufactured with a technology licensed from M/s LummusNovolen Technology,Germany.

DHDTU (Diesel hydro desulphurization unit) (France):

It is designed to process straight run and cracked feed stock. It is capable of producing BS VI grade diesel with improved cetane number.It is also designed to process naphtha and kerosene as part of its feed. Kerosene and naphtha are also drawn as products.

SRU (Sulphur Recovery Unit) (India):

There are six trains with dedicated (TGT) Tail Gas Treating section to enhance the sulphur recovery.

Pipelines

Coastal Movement of petroleum at MRPL is handled through the New Mangalore Port trust. Pipelines running from Refinery to the Port transport crude and products. In addition, MRPL operates a Single Point Mooring system, named Mangala-1, located nearly 17 Kilometers off Mangalore Coast. Mangala-1 with a draft of 32M can handle fully laden Very Large Crude Carriers ( VLCC) carrying a cargo of 300,000T.

With a view to reduce transportation cost of evacuation, a cross country pipeline between Mangalore and Bangalore became a necessity. Accordingly Petronet MHB Limited was formed to implement the project and operate this Cross-Country pipeline. ONGC holds a 23% equity holding in this pipeline. The pipeline, anput 363 Kilometers long originates from the refinery and delivers products to Devangonti near Bangalore with an intermediate receipt station at Hassan and two intermediate pumping stations at Hassan and Neriya.

Other support facilities:

Oil Jetty to receive Crude Oil and dispatch Petroleum products by ocean tankers.

Raw Water line, 43 kms long from river Netravathi.

Well equipped laboratory.

Blast proof centralized Control Room.

DCS based Control Room for all Process Units and offsites.

137 Storage Tanks including 7 Horton Spheres and 6 Bullet Tanks.

Products

• Bitumen        
• Furnace Oil
• High Speed Diesel (HSD)        
• MS        
• Xylol (Xylenes)        
• Naphtha                
• Pet Coke        
• Sulphur

Industry Overview

Global Energy Industry

A growing and more prosperous world needs increasing quantities of energy and that includes oil and gas. Although climate change is real and human activity contributes to it, energy demand will be driven by population growth, increasing economic activity and rising incomes. Energy producers (Oil & Gas) would face a predicament of having to increase energy output while trying to reduce emissions. The imminent demise of fossil fuels is overstated. ³

Renewables alone cannot meet the energy needs. In fact, International Energy Agency, projects that the world could still need nearly 70 million barrels of oil a day in 2040 even in the most aggressive low carbon scenario. Of course, how the company use that oil will change. Electric cars do not burn petroleum but they do use plastics in their construction and oil in their lubrication. Natural Gas is clean burning fuel and will remain an important agent of energy transition.

Climate change is a defining topic of its times. The choice is not between fossil fuels and renewable energy but rather how the company accelerate the growth of renewables while reducing green house gas emissions from the use of fossil fuels. Technology is an important part of this transition to alternate energy. Cost and intermittency are the challenges. The poor are more adversely affected by costs. Recent technological advances and economies of scale have crashed the cost barriers as seen in Solar and Wind Energy. Intermittency remains a barrier. Any technological solution to intermittency, like storage batteries, must address scale and resource availability.

Indian scenario

India is home to 18% of the world’s population but uses only 6% of the world’s primary energy. To meet its growing energy requirement, India is seeking to rebalance its energy basket. The country is making critical fuel choices between Oil, Coal, Natural Gas and Renewables for power generation. Coal still remains the most important source for power in India. The large percentage of coal based power plants is an indicator that it is here to stay for a considerable time. However, new investment decisions would be guided towards cleaner and low carbon resources.

In the case of motor fuels, India leapfrogged from use of BS-IV grade fuel to BS-VI grade on 1st April 2020. Contrary to speculation that Crude Oil will be losing ground in India, studies have forecast an increase in consumption of crude oil till 2040, the key drivers being trucks, passenger vehicles, aviation and Petrochemicals. A cost effective combination of cheaper solar power and battery storage may at best reshape the evolution of India’s power mix. While the world today may have an alternative source for power generation, there is no real alternative source for petrochemicals. Demand for oil is expected to grow at a CAGR of 4% till FY 2030. Refinery capacity is expected to reach 438.65 MMT by 2030 through several brownfield and greenfield projects. Petrochemical sector is expected to grow at 8-9% over the coming decade in line with economic growth. Petrochemicals will remain a significant and major source of oil demand growth over the next 20 years, driven by the increasing production of plastics.

The share of renewables and clean fuel like Natural Gas is rising in India. Natural Gas consumption rose fom 52.5 BCM in 2015-16 to 60 BCM in 2019. With the conclusion of the 10th round of City Gas Distribution Award 70% of the country’s population has been covered. Gas in the Energy Mix is expected to grow from 11% in 2010 to 20% by 2030 and India targets raising share of gas in energy mix from 6% to 15% by 2030.

The share of renewables in the energy basket has been increasing steadily. At the end of 2019, installed capacity of renewable energy constituted 23% of India’s energy mix, with hydro power 12%, Thermal 63% and Nuclear 2% constituting the rest. The government is continuously encouraging diversification. Bio-energy (compressed bio gas) is a case in point. Bio gas meant to be generated from agricultural residue, cattle dung and municipal solid waste is commercially viable in the Indian context. Advanced bio fuel plants (2G Ethanol) are proposed to be set up by Oil companies. The government has indicated viability support for commercialization.

Financial Highlights

The company achieved a turnover of Rs 60,728 crore (standalone)  during the financial year 2019-20 as against a turnover of Rs 72,283 crore during the previous financial year 2018-19.

The company incurred a loss of Rs 2,708 crore during the financial year 2019-20 as against a profit of Rs 332 crore for the financial year 2018-19.

The Gross Refining Margin (GRM) for financial year 2019-20 was (0.23) $/bbl as against 4.06$/bbl during the financial year 2018-19.

Highest Crude throughput of 1,428 TMT was achieved in the Monsoon Month of July, 2019. (Previous Highest was 1403 TMT in the Month of July, 2017)

The company processed 13.95 MMT of Crude during the FY 2019-20, as against the previous highest crude processing of 16.23 MMT during FY 2018-19. Total input to the refinery was 14.14 MMT as against the previous highest of 16.43 MMT during FY 2018-19.

The total direct domestic sales volume of all products during the FY 2019-20 has been 1702 TMT with a sales value of Rs 5,568 crore which is about 31% less than previous year sales value of Rs 8,034 crore

The company continues to enhance its market share for polypropylene with introduction of new and niche grades. The Company manufactured 310 TMT of Polypropylene and saw the sales of Rs 2,562 Crore in FY 2019-20 compared to the previous year sales of Rs 4,180 crore.

The company Shell MRPL Aviation Fuel and Services Limited has steadily acquired business for sale of Aviation Turbine Fuel (ATF) at Indian airports. The company achieved a turnover of Rs 823.58 Crores during FY 2019-20 against turnover of Rs 718.99 Crores in the previous FY 2018-19.

MRPL expects to extend its retail presence by adding 50 new outlets every year for the next 5 years in the states of Karnataka, Kerala and Goa. MRPL retail presence will be further expanded to Tamil Nadu, Andhra Pradesh and Telangana in the long term.

MRPL Standalone March 2021 Results

May 20, 2021; Reported Standalone quarterly numbers for Mangalore Refinery and Petrochemicals are:

• Net Sales at Rs 13,575.94 crore in March 2021 down 22.62% from Rs. 17,545.07 crore in March 2020.
• Quarterly Net Profit at Rs. 328.30 crore in March 2021 up 120.56% from Rs. 1,596.44 crore in March 2020.
• EBITDA stands at Rs. 873.57 crore in March 2021 up 146.19% from Rs. 1,891.41 crore in March 2020.
• MRPL EPS has increased to Rs. 1.87 in March 2021 from Rs. 9.11 in March 2020.

MRPL Consolidated March 2021 Results ⁴

May 20, 2021; Reported Consolidated quarterly numbers for Mangalore Refinery and Petrochemicals are:

• Net Sales at Rs 13,615.44 crore in March 2021 down 21.22% from Rs. 17,283.05 crore in March 2020.
• Quarterly Net Profit at Rs. 271.86 crore in March 2021 up 114.4% from Rs. 1,887.39 crore in March 2020.
• EBITDA stands at Rs. 931.03 crore in March 2021 up 138.77% from Rs. 2,401.13 crore in March 2020.
• MRPL EPS has increased to Rs. 1.55 in March 2021 from Rs. 10.77 in March 2020.

References

1. ^ https://www.mrpl.co.in/Content/Profile
2. ^ https://www.mrpl.co.in/Parent/54
3. ^ https://admin.mrpl.co.in/img/UploadedFiles/AnnualReport/Files/1c7d3b3b1d7f4c65b46e50c3422a1bdb.pdf
4. ^ https://www.moneycontrol.com/news/business/earnings/mrpl-consolidated-march-2021-net-sales-at-rs-13615-44-crore-down-21-22-y-o-y-6915551.html