OIL lines up Rs 2,000 crore SAF plant and bets on bamboo ethanol to fuel its green transition
Joining Indian Oil Corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL), Mangalore Refinery and Petrochemicals Ltd (MRPL), and Hindustan Petroleum Corporation Ltd (HPCL), Oil India Ltd (OIL) is now charting a twin clean-fuel strategy—foraying into sustainable aviation fuel (SAF) production with a Rs 2,000-crore plant in Paradip, Odisha, and scaling up ethanol output from bamboo-based feedstock in Assam. In an interview with Down To Earth (DTE)'s Puja Das, Chairman and Managing Director Ranjit Rath says the SAF project’s Detailed Project Report (DPR) is nearing completion, while the bamboo ethanol plant, powered by Finnish technology, will support the company’s petrol blending goals and expand its green chemicals value chain. Excerpts:
Puja Das (PD): Is OIL looking at producing sustainable aviation fuel?
Ranjit Rath (RR): It’s too premature for me to talk about it because it is still on the drawing board. Given the current government mandate, SAF blending is voluntary till 2030, at around five per cent. Being in the refining sector, and since we supply Aviation Turbine Fuel (ATF) to Northeastern airports, we understand that there is a need for SAF — ATF demand is growing about seven per cent year-on-year, evident from rising airport footfalls.
We are currently engaging with the Government of Odisha to set up an SAF facility in Paradip, based on the Hydroprocessed Esters and Fatty Acids (HEFA) process. The plant is expected to consume around 200 kilotonnes per annum (ktpa) of crude palm oil (CPO) or equivalent feedstock to produce about 150 ktpa of SAF. A DPR for the project is under preparation and is expected to be completed within a month.
PD: Why CPO?
RR: There are many pathways to produce SAF. The DPR will analyse economic feasibility — imported palm oil is one option; others are more expensive.
Palm oil is a readily traded product. However, demand influences prices greatly and long-term prediction is risky. OIL expects India will have commercial sustainable cultivation of palm oil and sourcing can be domestic in future.
The idea is to use imported palm oil from Malaysia or Indonesia as feedstock, which is why a coastal location like Paradip has been chosen. We already have a setup as part of the Numaligarh Refinery (NRL) expansion programme, with offices in Bhubaneswar and Paradip, along with a tank farm and a crude oil pipeline from Paradip to Numaligarh. Odisha also offers a strong market, and from there, the product can reach multiple locations. So, market access is not an issue.
Once the DPR is done, we’ll take a Final Investment Decision (FID) and then make a formal announcement.
PD: Are you considering any other feedstock to produce SAF and why?
RR: The Paradip plant will also be capable of processing feedstocks like palm oil mill effluent (POME), palm fatty acid distillate (PFAD) and used cooking oil (UCO) in whole or in blends of any corporation. UCO can be and will be used based on price advantage over other feedstocks and availability.
Different refiners have drawn up their own plans, and capacity additions will be guided by market demand. These will not be limited to the HEFA route, which uses vegetable oils or UCO as feedstock, but will also include alternative pathways that utilise captured CO2 and green hydrogen to produce olefins, followed by oligomerisation to generate synthetic hydrocarbons suitable for SAF production.
OIL/NRL is collaborating with Indian Institute of Petroleum (IIP) Dehradun to pursue alternate paths to produce SAF using captured CO2 and green hydrogen.
PD: How much will you be investing in it and what will be the duration?
RR: The investment order would be about Rs 2,000 crore. But it’s still too nascent at this point. Any plant typically takes about 2 to 2.5 years to commission, depending on execution.
PD: India’s SAF targets — one per cent by 2027, two per cent by 2028, and five per cent by 2030 — align with the ICAO’s goal of five per cent SAF use by 2030 under the CORSIA framework to cut aviation emissions. Has OIL set any internal SAF target?
RR: No, we don’t have an internal target. We will always be governed by the government’s target. Since it’s voluntary now, we’ll align accordingly.
PD: How will you navigate the price difference between ATF and SAF?
RR: Premium of SAF from that of conventional ATF hovers around $1300 per tonne. But in future, it may come down. In India, SAF is being sold at Rs 200 per litre compared to around 60 per litre of normal ATF (without taxes).
PD: About your ethanol projects, are you planning to upgrade to 3G or 4G?
RR: Not right now. We want to stabilise the 2G ethanol plant, which was inaugurated recently. The plant uses bamboo as feedstock — 500 TMT (thousand metric tonnes) of bamboo converts to 300 TMT of dry chips, producing 50 TMT of ethanol, 19 TMT of furfural, 11 TMT of acetic acid, and 30 TMT of liquid CO₂.
The furfural and acetic acid are green-certified, and we’ll explore export opportunities. The ethanol will be used for in-house blending, as NRL produces around 3 million tonnes of petrol annually, requiring 10 per cent ethanol blending. The liquid CO2 will be supplied to the food processing industry.
Downstream, we’re exploring API manufacturing, as acetic acid is a precursor. Furfural may also be used for pigments and resins, potentially leading to downstream units and exports.
PD: Why bamboo as a feedstock?
RR: After 2015, the government studied ways to reduce crude imports by 10 per cent. One avenue was ethanol blending. Initially, India focused on bagasse, rice straw, and molasses. But food-versus-fuel concerns arose.
A Finnish company, Chempolis, demonstrated a technology to produce ethanol from bamboo, which is rich in cellulose, hemicellulose, and lignin. Since Northeast India has abundant bamboo, OIL adopted it for its 2G ethanol project. Bamboo grows one metre per day, and OIL has distributed six million saplings locally to develop a sustainable ecosystem.
Currently, 3G ethanol (from refinery gases) is still under development — IOCL is working on it.
PD: Can bamboo ethanol be diverted to SAF production?
RR: Not now. The 2G ethanol (50 TMT) is dedicated for blending. SAF feedstock will be imported palm oil, at least for now.
PD: There are efficiency concerns with E20 fuel and beyond. What’s your view?
RR: The Ministry of Petroleum and Natural Gas (MoPNG) has issued an official statement, which I endorse.
PD: A national policy on geothermal energy has been put out, with potential areas being Ladakh, Himachal, among others, which are eco-sensitive. As you venture into it, how will you ensure that drilling does not damage the environment?
RR: We’re exploring geothermal energy in Assam’s depleted fields — at 5,000 m depth, we expect 100°C heat gradients. A Pre-Feasibility Report (PFR) is done; a DPR is in progress.
We’ve identified 8-10 wells and are collaborating with the Government of Arunachal Pradesh to assess hot springs.
We’re focusing on the Northeast Himalayas to avoid disturbing eco-sensitive zones. Our drilling footprint is small — 120m x 120m — and existing wells reduce environmental impact.
PD: What is your investment plan for deep-water exploration?
RR: We’ve committed about Rs 3,000 crore for exploration, including Andaman & Nicobar, where a gas discovery was made. Additional wells are planned in the Kerala-Konkan basin (Rs 800 crore) and the KG basin (shallow water).
Under OLP-IX, OIL holds 40,000 sq. km in the Mahanadi and KG basins. We’ll acquire 5,000 sq. km each of 2D and 3D seismic data, costing around Rs 1,000 crore. Each deep water well will cost Rs 1,000-1,200 crore.
PD: In critical minerals, are you exploring acquisition of lithium or rare earth minerals blocks abroad?
RR: Under the National Critical Mineral Mission, OIL has acquired a graphite-vanadium block near Itanagar (Arunachal Pradesh) and a potash block near Anumangad. Exploration has begun; total initial investment is Rs 100 crore. After DPR completion, mining may proceed with Hindustan Copper Ltd, our partner.
We’re also exploring lithium acquisitions overseas — Argentina, Bolivia, Chile, and Australia — and collaborating with India Rare Earths Ltd on rare earths. Domestically, we’ll consolidate in graphite, vanadium, and potash, which serve EV batteries and fertiliser needs.
PD: OIL aims 5 GW by 2040 from 188 MW renewable capacity now. Given the poor transmission infrastructure causing curtailment issues in states like Rajasthan, how do you plan to achieve this?
RR: We currently have 188 MW renewable capacity (14 MW solar, rest wind). Through OIL India Green Energy Ltd, we aim for 5 GW by 2040, requiring Rs 20,000 crore. We’ve signed MoUs with RVUNL (Rajasthan) for 1,000 MW solar and 200 MW wind, and with Assam for 25 MW (expandable to 640 MW).
In Rajasthan and Madhya Pradesh, we’re partnering with state utilities rather than operating directly — we’ll act as investors, not operators. So, we have nothing to worry about.
PD: Combining all segments — SAF, biofuels, renewables, CBG, green hydrogen, exploration, geothermal, and critical minerals, how much does OIL plan to invest by 2040?
RR: OIL expects a total investment of about Rs 1 trillion by 2040.