Major Expansion in India's Petrochem Output as Two Major Chem Parks Planned

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). The concept of constructing a massive chemical industrial estate has been knocking around the corridors of India's department of Chemicals & Petrochemicals (DCP) in one form or another since 2000. It was first mooted to build a highly integrated complex, which would be as competitive as Jurong Island in Singapore (PEC 94900038/54/68/83/90/102) or the Shanghai Chemical Industry Park (PEC 8800040/135/343) in China. The estate would have a refinery, a cracker, and derivatives plants, plus facilities further downstream the production chain.

Now, with the country's industrial sector growing at a rate of 6.3% in the period April-December 2003 against 5.5% for the same period in 2002, the DCP has taken the initiative with an invitation for expressions of interest (EOLs) from consultants. The successful consultant is expected to submit a project proposal on a suitable location in 12-14 months. The state government would then provide resources such as land and infrastructure to the project developer. Previous opposition to the idea of the DCP funding a consultancy for a project, which would essentially be run by the private sector appear to have been overcome.

The six Indian states of Orissa, West Bengal, Tamil Nadu, Andhra Pradesh, Maharashtra, and Gujarat have all expressed a keen interest in providing the site in for the estate project.

Concurrent with the DPC move, the Indian Oil Corp (IOC) (Mumbai, India) has agreed to commission a feasibility study on the setting up of a chemical park including a chemical jetty at Haldia in West Bengal state following a suggestion from the state's government, which has also been talking to other companies concerning the setting up of the 1,000 acre park to be the site for petrochemical production units and other downstream chemical production units.

IOC's participation in the chemical park, if it happens, might be something of a trade off with the West Bengal government, which has been opposing IOC's plan to build a new $253 million, 330 kilometer pipeline, and shift crude imports from Haldia to Paradip in Orissa and pump crude to its Haldia refinery and refineries in Assam from Paradip. This would save IOC around $80 million a year. The pipeline would also enable IOC to expand its Haldia refinery and set up a $400 million hydrocracker. Involvement in the chemical park might see the state government agree to the pipeline.

Haldia is the site of four major petrochemical facilities, including Haldia Petrochemicals naphtha-based complex, Mitsubishi's (TOKYO:4010) PTA plant, and Bayer's (NYSE:BAY) (Levrkusen, Germany) polys plant.

New petrochemical projects are mushrooming in India. Gail India plans to increase its ethylene production capacity at its Pata complex in Uttar Pradesh to 440,000 metric tons/year and to build an additional low density polyethylene and high density PE swing plant of 120,000 metric tons/years by fiscal 2007, according to a company statement.

This is the $144 million second phase of expansion for Gail and will increase the number of cracker furnaces from four to five. Debottlenecking at the swing plant, due to be completed by April this year will cost $17 million. Currently, the company produces 260,000 tons of polyethylene, 11,000 million tons of propylene, and 10,000 tons of butene per annum.

Indo Rama Synthetics (New Delhi) (PEC 89000163/164) in Maharashtra has upped the planned output for its new polyester project from 175,000 to 280,000 tons per annum and has pushed the plant start-up to September 2005 from mid-2004. The company reported that Indo Rama had decided to pursue a larger project, not only because of anticipated bullish demand for polyester stable fiber (PSF) and partially oriented year (POY) in Asia, but also to take advantage of India’s favorable customs duty for imported plant and machinery. The enlargement of the project has seen costs rise from $108 million to around $200 million. Work on the project started at the end of 2003 with Varner Power Gas as the engineering contractor and Zimmer the licensor.

Indian Petrochemicals Corporation (IPCL) (Vadorada, India) (PEC 89000245/590/684/685) has major plans across its production range by percentages ranging from 20% to 200%. These include upping polybutadiene rubber capacity from 15,000 to 65,000 tons per year and its polyvinyl chloride production from 135,000 tons to 285,000 tons per year. It plans to push benzene capacity up to 50,000 tons/year from 20,000 tons. Other similar increases are planned for its ploys and other chemical outputs. It expects to fund the projects through a combination of cash flow from operations and external borrowings.

Similarly Kanoria Chemicals and Industries (KCIL) (New Delhi) has completed expansion projects to increase its Alco-chemicals capacity by 50% from 50,000 tpa to 75,000 tpa and expects to obtain 85,000 tpa by operating at 110% capacity. KCIL has a 12% share of the Indian market for formaldehyde, which is expected to grow 15% per annum over the next six years from the current figure of around 500,000 tpa. KCIL also produces ethanol plus a range of chlor-chemicals and specialized products.

If you suffering from development vertigo from China's explosive growth and industrial consumption figures then look at India for a change...but not for a rest. India targets through 2020 for power, education, and demographic development are just as dizzying as China's. Millions of citizens from its total population of around 1.1 billion are joining its ambitious and goal oriented middle class every year driving the industrial machine forward.