Reliance Industries Set to Invest $8.9 Billion in Petrochemicals Through 2014 with Expansion of Jamnagar Complex

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Researched by Industrial Info Resources (Sugar Land, Texas)--India's Reliance Industries Limited (BSE:500325) (RIL) (Mumbai) has announced plans to invest $8.9 billion in 2014 to implement its expansion plans at the Jamnagar refinery in Gujarat. The expansion is the third phase--known as J3--in RIL's expansion of the world's largest single-site refinery complex.

The largest investment, about $3.5 billion, will be required to set up a cracker unit as part of a proposed petrochemical facility at Jamnagar. RIL initially proposed the cracker unit in 2007 and is now, according to RIL's controller Mukesh Ambani, "accelerating the implementation of this cracker."

The cracker unit will use residual gases generated by the two existing refineries at Jamnagar, currently being used to power captive power plants in the refinery complex, as feedstock. The 1.5 million-ton-per-year cracker unit will produce ethylene, low-density polyethylene (LDPE), propylene and monoethylene glycol, all of which have wide-ranging uses in industrial applications.

A further $3.3 billion will be invested in a coke-gasification plant to fuel power plants. The plant will generate pet coke as the residue of refining crude oil and will have a production capacity of 13 cubic meters per day. It also will produce sulfur, which will be sold in the local market.

The J3 plan includes the investment of $1.5 billion in the establishment of both a paraxylene plant, used to produce fiber and film, and a butyl rubber manufacturing facility. Butyl rubber is used for a wide range of applications in industry, including adhesives, personal care products and agricultural chemicals.

The remainder of the investment will fund various ancillary and supporting projects. The major unit from among these is the fifth crude oil distillation unit (CDU) at the refinery complex. The CDU will use crude oil from Rajasthan's Mangala oil field, which is operated by Cairn India Limited (BSE:532792) (Gurgaon, Haryana).

RIL has invested heavily in the Jamnagar refinery complex, at least $1.55 billion was spent on the two refineries there. The company also operates refineries at Vadodara and Hazira in Gujarat.

The two existing refineries at Jamnagar have a combined processing capacity of 1.24 million barrels per day of crude oil, which is about one-third of the total Indian capacity and represents about 2% of the global capacity.

The company is also reportedly exploring the possibility of establishing a 5 million-ton-per-year floating regasification platform for liquefied natural gas (LNG), although this is not part of the J3 expansions.

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