Page 131 - CW E-Magazine (12-11-2024)

Point of View

Investments in petrochemicals are coming, but a herd

mentality poses risks

As news reports elsewhere in this issue point out, India’s dependence on imports to meet its requirements of basic petrochemicals,
including polymers, is only expected to rise, despite projects – under implementation and on the drawing boards. This is partly because
the historical baggage of poor capacity builds will take time to catch up with rising demand.

How far India has come as far as petrochemicals are concerned can be exemplified by the rise in capacity for ethylene – the most
important olefin, widely considered a benchmark for the petrochemical industry as a whole. In 1961, India’s ethylene capacity was all
of 20-ktpa; today it is 9-mtpa. The first major boost to petrochemicals production came in 1973 with the setting up of an integrated
petrochemical complex by the erstwhile Indian Petrochemicals Corporation Ltd. (IPCL) at Vadodara. Centred around a small naphtha
cracker it included plants for polyethylene (PE) and polypropylene (PP). But the biggest boost to petrochemical production came
about in the first half of the 1990s, with the setting up of petrochemical complexes by Reliance Industries Ltd. (RIL) at Hazira
(1991), and by IPCL at Nagothane (1992) and Gandhar (1996). These crackers were gas-based or dual-feed, mainly feeding olefins
for polyolefins production. The turn of the century saw another phase of growth, with the commissioning of several plants at RIL’s
Jamnagar refinery, and on the eastern coast at Haldia (West Bengal) by Haldia Petrochemicals Ltd. (HPL). While the former was
based on refinery offgases – a low value feedstock – the latter was a more conventional naphtha cracker.
In the last few years, India’s public sector refiners have climbed on the petrochemicals bandwagon, seeking value-added outlets for
refinery streams. They have invested in aromatics (for feeding the polyester value chain), propylene (for PP and other chemicals notably,
oxo-alcohols and acrylate monomers), linear alkyl benzene (LAB), a key detergent raw material, and a few other projects. And more are
to come in the near-term.
Upcoming capacities
The most ambitious plans for petrochemicals are unarguably from Indian Oil Corporation Ltd. (IOC), which has announced
investments of about ~$15-bn in this business.

The largest investments are at Paradeep (Odisha) where IOC already operates a 15-mtpa crude oil refinery. The cracker
announced for the site will feed the manufacture of several products including polyvinyl chloride (PVC) (capacity: 600-ktpa), PP
(530-ktpa), LLDPE/HDPE (1,150-ktpa), isopropyl alcohol (IPA) (108-ktpa), phenol (300-kt) and polyester fibre (300-ktpa). At Panipat,
wherein IOC made its entry into petrochemicals, new plants and revamps will add capacities for PP (575-ktpa), maleic anhydride
(120-ktpa), styrene monomer (387-ktpa), HDPE (200-ktpa) and polybutadiene rubber (PBR) (60-ktpa). At Vadodara, plans include
PVC (200-ktpa), butyl acrylate (150-ktpa) and PP (500-ktpa) – with the principal feedstock, propylene (for the last two products),
coming from Fluidised Catalytic Cracking (FCC) unit at the refinery. A similar strategy is to be followed at the Barauni refinery, but
its smaller size (6-mtpa which will be raised to 9-mtpa) will mean the focus will only be on PP (200-ktpa). Likewise, its subsidiary,
Chennai Petroleum Corporation Ltd. (CPCL), which is building a new 9-mtpa refinery at Nagapattinam (Tamilnadu) (in addition to
one in the outskirts of Chennai), will valorise FCC propylene to also make PP (475-ktpa).

The HPCL Rajasthan Refinery Ltd. (HRRL), a joint venture between Hindustan Petroleum Corporation Ltd. (HPCL) and the Government
of Rajasthan, is investing ~$9-bn at its Barmer (Rajasthan) site. The product slate includes in the main PP (980-ktpa) and LLDPE/HDPE
(1,000-ktpa).

Investments of Bharat Petroleum Corporation Ltd. (BPCL) at its Kochi (Kerala) refinery will include 400-ktpa of PP (it already makes
acrylates and oxo-alcohols at the site), while at its Bina (Madhya Pradesh) refinery plants for PP (550-ktpa) and LLDPE/HDPE (1,200-ktpa)
are to be set up. BPCL’s cumulative investment in all these projects will be of the order of $6.5-bn.

Furthermore, at the Numaligarh Refinery in Numaligarh (Assam) PP capacity (360-ktpa) is also forthcoming.

Two entities – GAIL India Ltd. and Petronet LNG Ltd. (PLL) – are investing in propane dehydrogenation (PDH) plants to source propylene
for conversion to PP. While GAIL’s plant is coming up in Usar (Maharashtra) (500-ktpa of PP and 60-ktpa of IPA), PLL’s venture is at Dahej.
While PLL will consume much of the propylene captively for making PP (500-ktpa), it has also entered into a 15-year contract with Deepak
Phenolics for the supply of 250-ktpa of propylene for the latter’s phenol/acetone plants nearby.

Chemical Weekly November 12, 2024 131

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