India Looking for $17 Billion Investment in Refining and Petrochemicals

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Researched by Industrial Info Resources (Sugar Land, Texas). The current spate of strategic industrial and petrochemical project investment plans continues at pace throughout Asia. The Indian government has been working hard to accelerate inward investment after years of being the country where ‘it was easy to get money out but tough getting it in.’ It is fully behind a drive to promote an investment of $17 billion in the petrochemicals sector by 2010/2011.

To attract global players like Dow (NYSE:DOW)(Midland, Michigan), Dupont (NYSE:DD)(Wilmington, Delaware), and Sabic (Riyadh, Saudi Arabia) into the domestic sector the government is planning to lower excise duties on polymers and plastics. The import duty on naphtha, a basic petrochem industry feedstock, will be reviewed and the duty on capital goods will be treated at par with industry feedstock. Central sales tax will be phased out and the government will set up mega-chemical industrial estates, which will have a public or private partnership structure and will be modeled on the basis of Special Economic Zones (SEZs).

The government’s investment promotion echoes and reinforces the plans announced earlier in 2006 by the state-owned Oil and Natural Gas Corporation (NSE:ONGC.NS) (Bombay, India) to invest over $15 billion in refining and petrochemicals through 2009. The company will be partaking in the SEZ project plan in a period while raising its refining and petrochemical capacity to 45.5 million tons (910,000 bpd) per annum (mtpa) by 2009/10. Plans include raising the capacity of subsidiary Mangalore Refinery and Petrochemicals (MRPL) capacity from 9.69 mtpa to 15 mtpa and setting up a second 300,000 bpd integrated refinery and petrochemicals unit in the Mangalore SEZ in Karnataka state with an investment of $7 billion. ONGC will also invest $3.49 billion in a LNG gas terminal and power plant in Mangalore.

The company will make two $2 billion investments in 150,000 bpd refineries in the Kakinda SEZ in Andrha Pradesh and Barmer in Rajasthan.

The Karnataka state government has put its weight behind the investment drive by approving 40 new projects targeting inward investments of $13.2 billion. The projects are SEZ-based and cover biotech, textiles, petrochemicals, manufacturing, and IT.

Chennai Petroleum Corporation (CPCL), a subsidiary of Indian Oil (NSE:IOC.NS) (Bombay, India), is planning over $1 billion in various projects at its Manali refineries and is exploring the possibility of setting up a 300,000 bpd integrated refinery and petrochemical complex near Ennore. IOC is planning a new $1.8 billion refinery at Paradip with an integrated gas-fired power plant producing steam, power, and hydrogen from petroleum coke for internal use and will have a nil residue rating when in operation in 2009/10. Currently, IOC has over $3 billion in current projects under construction including expansions and pipeline networks for product distribution and delivery.

For related news items see August 18, 2006 – India’s Reliance Fast Tracks $6.1 Billion Refinery to Edge High Margin Competition.

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