Air Liquide to Increase Presence in India by Investing $61.8 Million to Set up Air Separation Unit

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Researched by Industrial Info Resources (Sugar Land, Texas)--Air Liquide (OTC:AIQUY) (Paris), a worldwide supplier of medical and industrial gases, has announced plans to invest about $61.8 million to set up northern India's largest air separation unit. The unit will produce 850 tons per day of oxygen, as well as liquid oxygen, argon and nitrogen. Air Liquide Engineering India (New Delhi) will build the unit, which is scheduled to come on stream by July 2009.

The products will meet the requirements of the 3 million-metric-ton-per-day naphtha cracker being set up by Indian Oil Corporation Limited (BSE:530965) (IOCL) (New Delhi) in Panipat, Haryana. The company has signed a long-term contract with Air Liquide for oxygen and nitrogen. The contract's details have not been disclosed. The air separation unit will also cater to other industries in northern India.

Air Liquide India, a wholly owned subsidiary of Air Liquide, has three gas-manufacturing and gas-filling units in India and offices and plants in Alwar, Rajasthan; and Roorkee, Uttaranchal; and offices in Ankleshwar, Gujarat; and Nacharam, Hyderabad. The manufacturing units run on a continuous basis and supply oxygen, hydrogen, nitrogen and argon to more than 200 customers in India's automobile, chemical, glass, healthcare, oil, petrochemical and steel industries.

Air Liquide started its business in India by supplying air separation technology to Bharat Heavy Plates & Vessels Limited (Visakhapatnam, Andhra Pradesh), now owned by Bharat Heavy Electricals Limited (BSE:500103) (New Delhi). It then set up its own plant in the 1980s in Hyderabad. It has since then been involved in the commissioning and management of air separation units as well as those of third-party customers in India.

The company intends to focus on the steel industry as its vehicle of growth in India. It has an air separation unit at the Rourkela Steel Plant owned by the Steel Authority of India (BSE:500113) (New Delhi), and another at the Bellary Steel Plant owned by JSW Steel Limited (BSE:500228) (Mumbai, Maharashtra). The company is also either bidding or negotiating with the Steel Authority of India, JSW Steel, Rashtriya Ispat Nigam Limited (Visakhapatnam, Andhra Pradesh), and others to set up plants and supply gases to their steel units on a build-own-operate basis. Two units expected to be operational this year will be in Jagadhia, Gujarat, and a gas filling facility in Dharuhera, Haryana.

The completion of IOCL's naphtha cracker and polymer complex in Panipat will mark IOCL's entry into the petrochemical industry. The unit is being designed to produce 800,000 tons per year of ethylene and is being set up with an investment of $3 billion. The cracker is expected to be commissioned in November 2009. The complex will also have a butadiene extraction unit and a benzene extraction unit. Downstream polymer units will include a high-density polyethylene unit, a polypropylene unit and a monoethylene glycol unit. The feedstock for the cracker will be sourced from IOCL's refineries in Koyali, Mathura and Panipat.

The production capacity of IOCL's existing refinery at Panipat is currently being increased from 12 million tons per year to 15 million tons per year. The expansion project is being undertaken with an investment of $176 million and is scheduled to be complete by December 2008. The expansion project includes a capacity revamp of the refinery's crude and vacuum distillation units, delayed coking unit, and the once-through hydrocracker. It also includes the installation of second-stage reactors in the diesel hydrotreater. IOCL undertook this expansion project to meet the growing demand for petroleum products in northwestern India.

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