IndianOil Corporation (IOC) is looking to pursue an ambitious expansion plan as it seeks to move further down the petrochemicals chain into the higher-value specialty chemicals segment, IOC's chief petrochemicals export manager Mathew George told DownstreamToday.
The company's two new projects, scheduled to go onstream in Jan 2013, are a 120,000-metric tons per annum (mtpa) styrene butadiene rubber (SBR) plant and a 130,000-mtpa butadiene extraction unit. Both plants are sited in Panipat, Haryana state.
"India does not have an SBR plant at present, so it makes sense for IOC to pursue the project," George said.
SBR, derived from styrene and butadiene, is used heavily in the production of tires. Approximately 50 percent of the world's tires are made from SBR. The alternative to SBR is natural rubber.
"In India, the main form of transportation is through the use of trucks. India has always grappled with the problem of a shortage in rubber supply, so there is a ready market for SBR," George added.
IOC's SBR plant is a joint venture with Taiwan's TSRC Corp and Japan's Marubeni. IOC holds a 50-percent stake. TSRC and Mbenzenebenzarubeni hold the remaining 30- and 20-percent stakes, respectively. TSRC is the technology provider, while Marubeni will supply the styrene feedstock.The butadiene extraction unit is fully owned by IOC.
Meanwhile, IOC is far along in its approval process for several world-scale petrochemical plants that it could bring onstream in 2015/16. The projects, which are awaiting final approval from IOC's board, include a 680,000-mtpa polypropylene (PP) plant, a 370,000-mtpa purified terephthalic acid (PTA) plant and a 570,000-mtpa paraxylene (PX) plant. The PP plant, if granted final approval, will be located in Paradip, Orissa state. IOC would site the vertically integrated PX-PTA plant in Gujarat. Oil major BP had said that it is interested in a joint venture for the integrated PX-PTA plant. IOC is at present evaluating BP's proposal.
"IOC is moving a bit slower on the PP project as at present, India is grappling with the issue of having a surplus of PP. In the case of PTA, as the product is consumer-driven, IOC wants to be sure that it will not be commissioning the plant when the global economy is at the bottom of the curve," George remarked.
"But there is an extremely high possibility that the [integrated] PX-PTA plant will move into the final approval stage," George disclosed.
The PP project was conceived as a two-pronged plan -- to utilize stranded propylene from its refineries and plan for India's future growth in plastics demand.
"As several of IOC's refineries are located in land-locked regions, this means that transporting feedstocks such as naphtha and propylene out of the country is both difficult and costly. In this respect, it makes sense to expand our propylene-derivative portfolio so that naphtha and propylene can be more used more efficiently," George explained.
India will struggle to absorb its PP production in the near-term as several world-scale PP projects were timed to be brought onstream at the same time, George said. Among the high-profile projects in 2012/14 in India are HPCL-Mittal Energy's 440,000-mtpa PP plant in Punjab, which was started up in May 2012, and ONGC Petro additions Limited's (OPaL) 340,000-mtpa PP plant slated for commissioning in Gujarat in late-2014.
From a longer-term perspective however, investing in developing its PP production capabilities makes sense for IOC considering that India's plastics demand will grow at an annual average rate exceeding 10 percent. Data from IOC show that India consumes only six kilograms per year of plastics. In contrast, global annual average plastics consumption is 25 kilograms per year. This means that India has tremendous growth potential in the PP segment.
PP is heavily used in the production of plastic bags, household items such as plastic bottles and bottle caps and high-transparency items such as CD cases. PP is also increasingly used as substitute for polycarbonate in the production of baby milk-bottles and water containers due to health and safety concerns surrounding the use of bisphenol-A in the production of these items.
Meanwhile, developing its PX-PTA production facilities is high on IOC's agenda because India is home to mammoth bottle-chip, spinning, textiles and clothing industries.
"India's polyester demand grows at an annual average rate of above 10 percent. The country is at present short of both PX and PTA, and hence it is very likely that IOC will push through the proposed integrated PX-PTA project. The domestic market can easily absorb new PX-PTA production," George said.
IOC's petrochemical assets in Panipat include a 100,000-mtpa PX plant, a 120,000-mtpa PTA plant and a 25,000-mtpa benzene plant.
The company's petrochemical assets in Panipat include a 857,000-mtpa ethylene plant, a 650,000-mtpa propylene plant, a 600,000-mtpa PP plant, a 300,000-mtpa high density polyethylene (HDPE) plant, a 350,000-mtpa HDPE/liner low density polyethylene swing plant, a 140,000-mtpa butadiene plant, a 325,000-mtpa glycols plant and a 130,000-mtpa benzene plant.
Quintella Koh has reported on the upstream and downstream oil and petrochemicals markets from 2004. Email Quintella at email@example.com.