Bharat Petroleum Corp. (500547.BY) Friday formally initiated commercial operations at its new 120,000-barrel-a-day refinery in central India that will allow it to sell fuel products in the country's north and take its total refining capacity to 30.5 million metric tons a year.

Indian Prime Minister Manmohan Singh inaugurated the refinery, which has a capacity to process 6.0 million tons of crude a year and was set up by Bharat Oman Refineries Ltd., a joint venture of Bharat Petroleum and Oman Oil Co.

The refinery at Bina in Madhya Pradesh state is expected to lower the company's dependence on fuel product purchases from abroad and private refiners like Essar Oil Ltd. and Reliance Industries Ltd.

The refinery has cost more than $2 billion to set up and it has the flexibility to process all types of crude oil, the company said.

The project comprises a terminal at Vadinar in the western state of Gujarat for unloading crude oil and a 935-kilometer pipeline passing through Gujarat and Madhya Pradesh to carry the crude to the refinery.

Bharat Petroleum and the other state-run refiners, Hindustan Petroleum Corp. and Indian Oil Corp., are adding refining capacity either by expanding existing units or through new projects.

India already has surplus refining capacity, with private refiners such as Reliance exporting most of their fuel products, but the country continues to build refineries as it seeks to become a refining hub in Asia .

According to oil ministry projections, India 's refining capacity will rise to 255 million tons a year by 2012 from 196.38 million tons as of Oct. 1.

Bharat Petroleum has a capacity to process 240,000 barrels a day at its Mumbai refinery and 190,000 barrels at Kochi . Its partially owned Numaligarh refinery in eastern India can process 60,000 barrels a day.

It plans to take its total capacity to 50 million tons in five years.

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