As pressures on energy supplies sustain oil prices at record highs, oil refiners are expected to benefit from higher refining profits due to a global shortage of oil-processing capacity predicted to last until 2011. Keeping this in view, Reliance Petroleum, that had planned to almost double output from its facility in Jamnagar, by December 2008, is pressing employees and contractors to complete construction of the world's largest oil refinery 3-6 months ahead of schedule.
Rivals have announced expansions to benefit from record-high prices for gasoline and diesel. US refiners plan a combined investment of US$18 billion over the next 5 years to increase production by about 11% (1.9 million bpd) as against Reliance Petroleum Ltd.'s investment of US$6.1 billion to build a 580,000 bpd refinery next to its parent's existing 660,000 bpd plant in Jamnagar in western India, making it the world's largest crude oil processing facility on one site.
The new refinery is to cost about 40% less than comparable plants elsewhere in the world, making it cost competitive for Reliance to compete for market share in the U.S., despite adding freight to transport the fuel from India to the U.S. The differential in freight cost is marginal because US imports its crude from the Middle East and a crude oil tanker can cover the distance from Jamnagar to the Persian Gulf in three days. The biggest advantage that Reliance enjoys over any other oil major or any other independent refinery is the ability to mobilze manpower at cheaper cost.
14-Aug-06 
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