Indian Oil Corporation to Build Six Sulfur Pellet Manufacturing Trains at Panipat

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Researched by Industrial Info Resources (Sugar Land, Texas)--Leading public-sector refiner Indian Oil Corporation Limited (BSE:530965) (IOC) (New Delhi) has announced plans to build a sulfur recovery unit to manufacture sulfur granules and pellets at a site close to its facility at Panipat, in Haryana. The decision to produce pellets in place of sulfur lumps comes after strong resistance from customers to purchase sulfur lumps. Sulfur pellets are emerging as a popular alternative to lumps, as they are environmentally friendly and cleaner. Further, market studies have revealed that IOC's competitors already are supplying pellets to customers.

In the next two years, IOC plans to build the pelletization unit with an estimated investment of $23.4 million. The company's existing sulfur recovery unit produces about 450 to 480 tons per day of sulfur. The new facility will be a state-of-the-art unit that will include:

• Six pelletization trains, each with a capacity of 144 tons per day
• About 1,200 tons of storage facilities
• A 5,400-ton conveyor storage and molten sulfur storage unit to hold stock for three days
• Conveyor belt to move sulfur pellets to storage units
• Automated processes to load sulfur pellets to trucks
• A weigh bridge with a capacity of 60 tons

Sulfur is a byproduct produced during the process of refining crude oil. Sulfur is used extensively in the vulcanization of rubber and the manufacturing of matches, gunpowder, fertilizers, dyes and detergents. The global spot prices of sulfur have increased mainly due to the growth in demand in China. In July, spot prices of sulfur in China grew by $5 per ton from $99 per ton.

IOC's Panipat refinery is considered to be one of the most modern refineries in the country, with the capability to process a wide variety of crudes. The refinery is doubling its capacity to 12 million tons per year from 6 million tons per year. The refinery also consists of hydrocracking and residue-fluidized catalytic cracking units and a catalytic-reforming facility. IOC also operates the world's largest linear alkyl benzene (LAB) facility in Gujarat, and India's largest naphtha-cracker and state-of-the-art paraxylene and purified terephthalate acid unit at Panipat. In 2009-10, the company sold 24 million tons of LAB and registered 30% growth in LAB exports.

IOC employs about 34,000 people and has a 48% market share of India's petroleum production. The company also accounts for 71% of the existing pipeline capacity and 34% of India's refining capability. IOC operates 10 of India's 20 refineries, with a combined capacity of 62.7 million tons per year, and operates a pipeline transmission network of 10,899 kilometers. IOC's product portfolio includes Xtra Premium petrol, LPGas, Xtra Mile diesel, Servo lubricants and Indane.

In a related development, as part of its efforts to raise funds for future projects, the Indian government has announced a 10% divestment of its stake in IOC. IOC, which has embarked on a $1.6 billion capital expenditure program for 2010-11, is expected to utilize these funds. During the first quarter of 2010-11, the company reported losses of $727 million, in comparison to a profit of $792.4 million for the same period over the last fiscal year.

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