The Hindu Business Line : IOC mulls integration of downstream activities

Growth proposals Implementing a mega plan envisaging an investment of Rs 30,000 crore in petrochemicals by 2011-12 Eyeing a turnover of Rs 18,000 crore from petrochemicals business

New Delhi , Nov. 25

IOC, which is working towards becoming an integrated energy major, is examining the prospects of further integrating its downstream activities into the petrochemicals business.

"We are examining the possibility of putting new standalone units to utilise product streams from our existing refineries," said Mr B.M. Bansal, Director (Planning and Business Development).

"This would help in producing value-added products that would help in achieving better exploitation of the hydrocarbon chain."

He told Business Line that the company was undertaking a study, which is to be completed by this fiscal.

"The implementation of the project will take another 2-3 years once the viability study is ready."

IOC has chalked out a growth plan for its petrochemicals business, whereby it proposes to integrate its refinery with petrochemicals plant.

Value-added products

This project will help in utilising product streams from the company's existing refineries at Haldia, Gujarat and CPCL for producing value-added speciality products such as special grade chemicals and fibre intermediates.

For instance, distillation leads to a number of byproducts that are not used but this project will help IOC to produce value-added products.

The per capita consumption of plastics in India (four kg) is far lower than the world average (24 kg).

However, the last two decades has seen an average growth of 13-15 per cent in the Indian petrochemicals industry and sizeable opportunities also exist for export of petrochemicals in the Asian region, including China.

"Taking this into consideration, IOC is implementing a mega plan envisaging an investment of Rs 30,000 crore in petrochemicals by 2011-12. These projects utilise product streams from refineries, thereby achieving better integration down the hydrocarbon chain."

New projects

For low-investment, high-value projects such as MTBE and Butene-1 at its Gujarat refinery at Vadodara, the company has set up a linear alkyl benzene plant at the same refinery and an integrated paraxylene/purified terephthalic acid plant at Panipat. A naphtha cracker complex with downstream polymer unit is coming up at Panipat and is scheduled for commissioning in 2009.

The company is also planning to develop a similar refinery-cum-petrochemicals complex at Paradip.

In addition to these greenfield projects, the company has infused Rs 150 crore towards acquisition of equity in Haldia Petrochemicals and has an agreement with the West Bengal Government for developing a petroleum, chemicals and petrochemicals investment region at Haldia.

Currently, IOC and its subsidiaries account for 47 per cent of the petroleum products market, 41 per cent refining capacity and 74 per cent petroleum products pipeline capacity. It is eyeing a turnover of Rs 18,000 crore from its petrochemicals business by 2011-12.