MOSCOW (MRC) -- Indian Oil has announced plans to expand the capacity of its refinery at Panipat, India, from 15 million metric tons/year (MMt/y), to 25 MMt/y, reported Chemweek.
The company will also build a polypropylene (PP) unit and a catalytic dewaxing unit at the site. The cost of the project is 329.46 billion Indian rupees (USD4.45 billion). The plan is the latest in a series of projects approved by Indian Oil to improve integration with petrochemicals at the company's refinery sites. The capacity of the planned PP facility has not been disclosed.
The new refining capacity and PP unit are expected to be commissioned by September 2024. Indian Oil says the expansion will improve the operational flexibility of the refinery to meet domestic energy demand and enhance the site's petrochemicals intensity. Increasing production of petchems and specialty products will improve margins and de-risk the company's conventional fuels business, it adds.
The company already operates a PP plant at Panipat with a capacity of 600,000 metric tons/year, according to IHS Markit data.
Indian Oil entered the petchems business more than a decade ago and the strategy has yielded positive results, says Utpal Sheth, executive director/polyolefins at IHS Markit. Sheth notes that the company also built PP plants at its recently constructed refinery and petchem complex at Paradip, India. “Now they plan to expand their existing refineries and build residue fluid catalytic cracker (RFCC)/PP plants at Panipat,” he says. Indian Oil's management has approved similar plans to build PP plants at refineries in Gujarat and Assam States, adds Sheth.
Indian Oil with its affiliate Chennai Petroleum (Chennai, India) decided in June 2020 to build a 9-MMt/y refinery complex at Nagapattinam, India. The companies will also build a PP plant. The cost of this project is Rs289.8 billion. According to Premasish Das, executive director/energy at IHS Markit, the project at Nagapattinam will not be online before 2027–28.
IHS Markit expects Indian Oil to build about 1.5 MMt/y of PP capacity in total at Panipat, Baroda, and Chennai, and in Assam before the end of this decade. The plans will more than double the company's PP capacity. Sheth says these new PP capacities, together with additions planned by other public and private companies, will ensure India has high self-sufficiency in PP.
IHS Markit says that over the last five years, India has increased its PP capacity at an average of about 6.1%/year and that this is expected to continue at a healthy rate, to reach about 6.8 MMt/y by 2024, including hypothetical capacity.
Demand for PP, the fastest-growing polymer, is likely to grow at high single-digit rates in India in the near- to medium term, Sheth says. Refinery-linked PP production is cost competitive compared with other technologies used worldwide, he adds. “The relative incremental capital investment is moderate. Thus, building downstream PP plants makes a perfect strategy for Indian Oil,” Sheth says.
Refinery-petchem integration will become a more critical issue with COVID-19 and beyond in view of rising petchem demand versus slowing fuel consumption, according to Stephen Jew, director at IHS Markit.
Sheth says that multinational oil and gas companies are integrating downstream to add value to their business. He notes that the Indian government introduced recently a policy to scrap personal vehicles after eight years of use, to increase vehicles' fuel efficiency.
As MRC informed before, India’s Chemicals and Fertilisers Minister D V Sadananda Gowda said in mid-December, 2020, the demand for chemicals and petrochemicals is expected to rise 9% annually, and the size of the industry is likely to grow to USD300 billion by 2025.
According to MRC's ScanPlast report, PP shipments to the Russian market reached 1 240,000 tonnes in 2020 (calculated using the formula: production, minus exports, plus imports, excluding producers' inventories as of 1 January, 2020). Supply of exclusively PP random copolymer increased.
Indian Oil Corporation Limited, or IndianOil, is an Indian state-owned oil and gas corporation with its headquarters in New Delhi, India.