Nayara focuses on refining, retail fuels, exploring clean fuel options

Nayara Energy has embarked on a diversification drive aimed at expanding its retail fuel and petrochemicals footprint while making inroads into clean fuels amid efforts to strike a balance between traditional as well as new energy in its portfolio, company officials and analysts said.

While its petrochemicals unit -- which forms a big part of the refinery expansion – is set to add to the country's supplies of key feedstocks, the company's recent move to partner with Gulf Oil Lubricants India Limited for its retail business and plans to set up an ethanol plant signals its intent to move beyond the traditional refining business and have a diversified presence.

"The much awaited, phase one of its diversification project will propel the company to cement its position in the petrochemical sector in the demand-intensive western region, while phase two will be vital for expanding it to the polyethylene and downstream derivatives," said Abhishek Ranjan, South Asia oil research lead at S&P Global Commodity Insights.

According to Commodity Insights, Indian refiners were proactively embracing petrochemical ventures as part of a broader strategy to adapt to changing market dynamics, enhance competitiveness, and position themselves for sustained growth in the future in the event energy transition and electric vehicles hit demand for transport fuels.

Nayara operates the Vadinar refinery, India's second-largest single-site refinery, with a capacity of 20 million mt/year and delivers about 8% of India's refining output. The refinery has a complexity index of 11.8. It also operates over 6,300 retail fuel outlets.

Under Phase 1 of its petrochemical expansion project, Nayara Energy is setting up a 450,000 mt/year polypropylene plant within its Vadinar Refinery in the western state of Gujarat. The plan includes a propylene recovery unit along with upgrades to the existing fluidized catalytic cracking unit.

Focus on the core

"For Nayara, petroleum refining and retail fuel distribution will continue to form key parts of its portfolio, but the company is open to explore new business opportunities given the energy landscape is changing. Therefore, we are seeing some developments around ethanol and hydrogen," said one senior refining source.

Recently, Nayara Energy announced plans to set up two ethanol plants, each with a capacity of 200 kiloliters per day -- in the states of Andhra Pradesh and Madhya Pradesh. The company has already identified and purchased land in both states for the proposed plants.

Company officials said the establishment of ethanol facilities would significantly enhance its ethanol supply reliability and play a crucial role in meeting the Indian government's 20% blending target by the end of fiscal year 2025-26 (April-March). The company was planning to eventually increase the number of plants to five.

"Although Nayara is contemplating about expanding the refinery in its phase two of the project, it is expected that the primary focus will remain on the expansion of its domestic retail outlets and ethanol blending. This will also be driven by the government policy supporting the ethanol blending target, and further expansion as per the vision of the government," Ranjan added.

In its latest retail initiative, Nayara Energy announced a strategic partnership with Gulf Oil Lubricants India Ltd. under which Gulf's entire automotive product range, including lubricants for two-wheelers, passenger cars, commercial vehicles, and agriculture-related vehicles, would be distributed through Nayara Energy's extensive retail fuel network.

"This strategic alliance is part of a three-year contract leveraging Nayara Energy's reach to further strengthen Gulf Oil's brand presence and product availability to cater to the expanding automotive market, particularly along the country's rapidly developing highway infrastructure in India," the two companies said in a recent joint statement.

In addition, NTPC Green Energy Limited, a wholly owned subsidiary of integrated power producer NTPC Ltd, and Nayara Energy have recently signed an agreement to jointly explore opportunities in the green hydrogen and green energy space. The agreement aims for collaboration to produce green hydrogen for Nayara Energy's captive usage, which would help the company reduce its carbon footprint.