India Planning to Implement Mega Petrochem Projects in Move up Global Capacity Rankings

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Two giants of the India petrochemicals sector are pushing national production capacities up at a rate to keep pace with industrial development and to be competitive in world export markets.

One of the country's largest companies, Reliance Industries (RIL) (BOMBAY:RELI) (Bombay, India) will invest $1.35 billion on expansions and new projects to create an additional production capacity of 2.4 million tons/year for seven petrochem products over the next two years. Indian Oil Corporation (BOMBAY:IOC) (New Delhi, India) plans to set up an 800,000 ton ethylene cracker (PEC 89000613) at the proposed Paradip refinery. This follows its failure to acquire a managerial stake in Haldia Petrochemicals Limited. IOC is India's largest commercial enterprise and ranked 191 in the Fortune 500 (2003).

For a listing of active petrochemical and refining projects in India click on the image at right.

RIL's investment will see the company increase its total petrochem capacity to 15 million tons/year from the present 12.5 million tons. Currently, under construction are plant additions with nameplate capacity of 550,000 tons/year styrene (PEC 89000686), 481,000 tons/year aromatics (PEC 89000730), 532,000 tons/year purified terephthalic acid (PTA) (PEC 89000158), 280,000 tons/year polypropylene (PP) (PEC 89000151), 216,000 tons/year of partially oriented yarn (POY) 40,000 metric tons/year of polyester fiber (PSF) (PEC 89000642) and 125,000 tons/year of butadiene. (PEC 89000731/32/33)

These expansions will see the company emerge as the world's largest polyester company with a total production capacity of 1.38 million tons/year and a domestic share of 54%. These total exclude the capacity operated by half a dozen stand-alone polyester companies in the RIL group.

RIL will become the world's third largest paraxylene (PX) producer with a capacity of 1.95 million tons/year and a domestic market share of 63%. In PP, they could claim the seventh ranking with 1.63 million tons/year and a domestic market share of 68% and 15th spot in butadiene ranking with a capacity of 175,000 tons/year and a domestic market share of 68%. When it has commissioned India's first styrene plant it will have 100% domestic market share and rank 14th globally. (PEC 89000594/97/98)

RIL's businesses cover exploration and production of oil gas, refining and marketing, petrochemicals, textiles, financial services and insurance, power, telecom and infocom initiatives. Company profits year on year are up 29% and now stand at $1.182 billion which is equivalent top 3.5% of India's GDP. It is planning to invest $670 million in modernization of existing assets in which petrochem will have a share. Over the next five years the company intends to invest $4.42 billion across group companies, with another $3.35 billion going to the development and transportation of gas from the Krishna-Godavari gas reserves off the coast of Andrha Pradesh.

Competing in the major projects stakes IOC is currently constructing a nine million ton refinery on India's east coast and plans to set up a $1.56 billion aromatics project in the same complex. This is in addition to the 800,000 ton Paradip ethylene cracker.

The company also plans to create similar capacity either in Gujurat or Haryana where it already has refineries. There are plans to expand the capacity of its linear alkyl benzene (PEC 89000425) plant in Gujurat from 120,000 to 150,000 tons. Both these projects are scheduled for commissioning in 2007. Analysts predict the petrochemicals cycle will peak in 2005-2007.

IOL is planning for the option raise its Greenfield projects to one million tons each, which will put them into top global rankings and compete with the capacities of RIL. Their thinking is long terms with exports as a major focus in addition to the domestic market. Customers will include for the new cracker will include Mitsubishi’s purified terephthalic acid plant at Haldia that is currently importing raw material.

Paradip refinery had its commissioning date shifted from 2004-2005 to 2007-2012 by the state, as India currently has a surplus refining capacity with 116 million tons refining set against a petroleum product demand of 105 million tons.