An Indian Oil Corp unit plans to invest $5.5b to gradually raise the capacity of its smallest refinery co-owned by Iran to 300,000b/d. The purpose of the capacity raise is to help meet a surge in demand for refined products in the world’s fastest growing major economy, reported Reuters.

The Nagapattinam plant operated by IOC’s subsidiary Chennai Petroleum Corp (CPCL) requires a complete overhaul to produce the cleaner, higher grade fuels needed to meet rising demand in southern India, according to The Economic Times.

It is expected that the Nagapattinam plant will be raised to between 120,000b/d and 180,000b/d until it reaches the next phase of 300,000b/d. In addition, the refinery site has extra land available that makes expansion easier to accommodate, than in the case of CPCL’s Manali refinery with a total capacity of 210,000b/d.

CPCL’s two plants are located in the southern state of Tamil Nadu, in which Iran’s Naftiran Intertrade Co Ltd has a 15.4% stake.

India is stepping up construction of new refineries and expanding a number of existing plants to meet demand. The country is seen as the most important driver of world energy demand growth in the years to come.