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IOC plans to set up ethylene cracker at Paradip refinery

Archana Chaudhary

Mumbai , April 23

AFTER it's failed attempt to acquire managerial stake in Haldia Petrochemicals Ltd, Indian Oil Corporation (IOC) plans to set up its own 8,00,000-tonne ethylene cracker at the proposed Paradip refinery. The petrochemicals project will target exports to the Chinese market.

"Whatever investments were to be made in Haldia will now be made in the new cracker. We are already putting up a nine million-tonne refinery on the East Coast. We plan to design the refinery project to make allowance for setting up a Rs 7,000-crore aromatics project in the same complex," a senior IOC official told Business Line.

This is the second Greenfield petrochemicals project planned by IOC for commissioning during the 11th Five-Year Plan. The company has plans to set up a similar capacity either in Gujarat or Haryana where it has its refineries. It also has plans to expand the capacity of its linear alkyl benzene plant in Gujarat from 1.2 lakh tonnes to 1.5 lakh tonnes.

The company hopes to set up both the projects by 2007. This should help it make the most of a predicted upswing in the petrochemicals cycle. According to analysts, the cycle is expected to peak in 2005-07.

Both the projects are part of IOC's plans to expand its presence in the petrochemicals business through building large ethylene capacities. The company plans to have the option of ramping up both the Greenfield capacities to 1 m.t. There are only a couple of projects of this size in the world. The only competing capacity is with Reliance Industries.

"We have to be competitive," said the official. " Our thinking is long term. And we are not only talking of Indian markets, exports are also a major focus."

Prospective customers for the Paradip cracker also include Mitsubishi's purified terephthalic acid plant at Haldia, which is currently importing its raw material.

IOC has already signed a memorandum of understanding with the Orissa Government that allows it the very same financial sops withdrawn by the State in February 2000.

Paradip refinery was originally scheduled for commissioning in 2004-05. But the State-run refiner wanted to reschedule it to the 11th Five-Year Plan (2007-2012), as currently the country has a surplus refining capacity of 116-m.t. as against petroleum product demand of just over 105 m.t.

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