Post on 07-Mar-2018
Realizing the Petrochemical Vision
4th IndianOil Petrochemical Conclave Gurgaon, 12th February 2015
2
Agenda
India – A Growth Perspective
Petrochemicals – A Vehicle for Growth
• Petroleum Refining – An Overview
• Eastern India – Observations
• Paradip Refinery – An Overview
• IndianOil in Petchems & Future Plans
• Imperatives for Growth
Summary & Conclusion
3
Agenda
India – A Growth Perspective
Petrochemicals – A Vehicle for Growth
• Petroleum Refining – An Overview
• Eastern India – Observations
• Paradip Refinery – An Overview
• IndianOil in Petchems & Future Plans
• Imperatives for Growth
Summary & Conclusion
4
Political & Regulatory
Emerging Opportunities
Cultural
Growth Functions
Growth Team
Growth Process
Career Development
Non Customer
Demo- graphics
Behavior
Competitor’s Customers In-Direct
Competition
Competitive Strategy
Competitive Benchmarking
Emerging Competition
Country Risk
Economic Trends &
Issues
Economic Threats
Economic Trends
Emerging Technology
New Applications
Disruptive Technologies
Industry Expansion Potential
Industry Convergence
Industry Shifts
External Industry Impact
Industry Integration
India
TECHNOLOGY
BEST PRACTICES
INDUSTRY
GLOBAL
CUSTOMER
ECONOMIC
COMPETITIVE
India – Perspective of the Complex Business Universe
India’s growth recovery dilemma
5
•Limits policy space for monetary stimulus
• Yet to achieve critical mass
•High borrowing costs although business sentiment is improving
• Currency not yet fully stabilized, risks not over
External pressures
Investment slump
High inflation
Structural reforms
Towards Manufacturing Growth
Regulatory
Support
Local Products for
Global End-users
Investments across
the Value chain
Human
Capital
Management
R & D to
increase
efficiency
Cultural &
Mindset
Shifts
Growth
through
Innovation
Tectonic Shift in Manufacturing
Traditional/Current
Future
8
Agenda
India – A Growth Perspective
Petrochemicals – A Vehicle for Growth
• Petroleum Refining – An Overview
• Eastern India – Observations
• Paradip Refinery – An Overview
• IndianOil in Petchems & Future Plans
• Imperatives for Growth
Summary & Conclusion
Petrochemical Industry - Value Addition Opportunities
10
Economies of Scale
Domestic Demand Supply Situation
Downstream and upstream Integration
Infrastructure Global Demand Supply Situation
Costs( Feedstock and fixed costs)
Critical Success Factors Affecting the Indian Petrochemical
Industry
Indian Petrochemical Industry - Critical Success Factors
11
Agenda
India – A Growth Perspective
Petrochemicals – A Vehicle for Growth
• Petroleum Refining – An Overview
• Eastern India – Observations
• Paradip Refinery – An Overview
• IndianOil in Petchems & Future Plans
• Imperatives for Growth
Summary & Conclusion
Major Global Refinery Expansions - 2014
Pengzhou, Petrochina, 200 Quanzhou, Sinochem, 240 Jiujiang, Sinopec, 100
Tokuyama, Idemitsu Kosan, 120 Muroran, JX Nippon, 180
Kumell, Caltex, 125 Geelong, Shell, 105
Yanbu, Saudi Aramco/Sinopec, 400
Paradip, IndianOil, 300
‘000 bpd
• Net planned CDU capacity expansion: 880,000 b/d in 2014
Additions - mainly in East of Suez (Saudi Arabia, China, India)
Europe and OECD Asia – intentions of further outages
Capacity additions to exceed incremental product demand in near term
Source: JBC Refining Outlook, Jan’14
India: Refining capacity
13
IOC/CPCL
31%
BPC/NRL/
BORL14%
HPC/HMEL
11%
ONGC/
MRPL7%
RIL
28%
ESSAR
9%
Capacity Share
Capacity (IOC): 54.2 MMTPA Capacity (CPCL): 11.5 MMTPA Group Capacity: 65.7 MMTPA India Capacity: 215.1 MMTPA
India: POL Scenario
13 16 18 26
39
48
68 77 80
100
140 144 143
2 2 2 3 6 9 15 14
7 11 14 13 12
2 2 4 7 11
18
28 27 31 43
59 59 61
12 15 17 23
34 40
56 63
56
68
95 98
95
20
01
-02
20
02
-03
20
03
-04
20
04
-05
20
05
-06
20
06
-07
20
07
-08
20
08
-09
20
09
-10
20
10
-11
20
11
-12
20
12
-13
20
13
-14
POL – Imports/Exports US$ billion
Imports-Crude oil
Imports-Petroleum Products
Exports-Petroleum Products
Net
10
0 10
4 10
8 11
2
11
3
12
1
12
9 13
4 13
8
14
1 1
48
15
7
15
8
20
01
-02
20
02
-03
20
03
-04
20
04
-05
20
05
-06
20
06
-07
20
07
-08
20
08
-09
20
09
-10
20
10
-11
20
11
-12
20
12
-13
20
13
-14
POL Consumption India - MMT
Refining Capacity of 215 MMT vs Consumption of 158 MMT – Surpluses Exist
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2011-12 2012-13 2013-14
7.1 6.2 6.3 6.7
0.9 0.2
5.0
1.4
4.6
Segment-wise Growth (%)
Services Industry Agriculture8.6 8.9
6.7
4.5 4.9
3.2
2.3
5.0
6.0
0.7
2009-10 2010-11 2011-12 2012-13 2013-14
GDP Growth (%) POL Cons. Growth (%)
• GDP growth – dominated by agriculture and services • POL growth – lowest in five years, in line with the lowest growth in industry, de-growth in vehicle sales and reducing power deficit
Domestic Economy vis-à-vis POL Demand
Source: PPAC/ MoSPI
NAPHTHA DEMAND SUPPLY SCENARIO IN INDIA
(Mn Tons)
19
24
12
18
0
5
10
15
20
25
30
2014 2019 (E)
PRODUCTION
CONSUMPTION
Advantages
• C3-C6 based streams available
• Aromatics can be produced from Naphtha
cracker Py- gas
• Py-gas is primarily used for gasoline blending
in India.
• Toluene and higher aromatics can be
extracted from py-gas stream from naphtha
cracker, India is significantly short in these raw
materials
• Styrene needs (100% imports currently) can
be met through naphtha crackers
• Ability to target specialty products/niche
grades for import substitution
Concerns
• Single site feedstock availability -pooling
• Competing in the C2 stream with ethane
based producers
• Polypropylene already surplus in India – need
to find new outlets/products.
Naphtha Demand Estimates for FY19 as per MOPNG
Naphtha Surplus but will naphtha crackers be cost competitive?
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Agenda
India – A Growth Perspective
Petrochemicals – A Vehicle for Growth
• Petroleum Refining – An Overview
• Eastern India – Observations
• Paradip Refinery – An Overview
• IndianOil in Petchems & Future Plans
• Imperatives for Growth
Summary & Conclusion
31%
22%
26%
21%
India -Population Vs Petrochem Demand
18 Source: IOCL Analysis
21%
11% 47%
21% Demand
Popln
•Low percapita consumption •Regional Imbalance •Increase Manufacturing Capacity in North & East
Eastern India – Opportunity Knocks
Source: IOCL Analysis
Potential for various Petchems–
Paradip
50% 50%
Development of Eastern India
8%
22%
32%
1980 2000 2010 2020 2040
West of the Kanpur-
Chennai line
East of the Kanpur-
Chennai line
Chennai
Kanpur-
IndianOil’s Paradip Refinery will be a major driver of growth in Eastern India
*Middle Class – Income Group above $4000/year
Percentage of Indian *Middle Class….
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Agenda
India – A Growth Perspective
Petrochemicals – A Vehicle for Growth
• Petroleum Refining – An Overview
• Eastern India – Observations
• Paradip Refinery – An Overview
• IndianOil in Petchems & Future Plans
• Imperatives for Growth
Summary & Conclusion
Paradip Refinery – From Aspirations to Reality
One of the most modern refineries in the world
Crude Mix: 100% HS; 40% Heavy
• Ability to process toughest crudes
Distillate Yield: 81%
• Even with high % of heavy crudes
Complexity Factor: 12.2
• Superior secondary processing
Energy Consumption (MBN): 50
• Among the best in the Industry
On the verge of completion
Capacity: 15 MMTPA; Approved Cost: US$ 4970 Million
Paradip Refinery: Product profile
Feedstock Capacity (KTA)
Crude Oil 15000
Products Capacity (KTA)
LPG 870
Ethylene Potential 200
Propylene Potential 700
MS 3400
ATF/ SKO 1200
Diesel 5750
Pet coke 1250
Sulfur 200
Internal Fuel & Loss 1430
Total Products 15000
Feedstock for Chemicals
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Agenda
India – A Growth Perspective
Petrochemicals – A Vehicle for Growth
• Petroleum Refining – An Overview
• Eastern India – Observations
• Paradip Refinery – An Overview
• IndianOil in Petchems & Future Plans
• Imperatives for Growth
Summary & Conclusion
25 25
IndianOil - Petrochemicals Capacity Growth
2004 2006 2010 2013 Total
120 120
553 553
1250 1250
325 325 138 138 60 60 155 155
Figures in KTA
LAB PTA Polymers Glycols Butadiene SBR Others
2601
2nd largest petrochemicals player in the country Capacity share: LAB – 24%; PTA - 14%; Polymers – 18% and Glycols – 25%
India’s 1st SBR Plant
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Initiatives Planned for Future Growth
A. DEVELOPMENT OF PETROCHEMICAL HUB AT PARADIP
• 700 kta Polypropylene Unit based on FCC propylene under implementation
• Planning for C2 Derivatives
• Integrated pX/PTA units being examined • Accelerated development of downstream petrochemical
industry for polymer processing like packaging, fibre & filament, automotive, health care & personal care
• Creation of employment opportunities • Impetus to petrochemical demand growth in Eastern India
where petrochemical consumption is the lowest.
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Initiatives Planned for Future Growth
B. UTILISATION OF UNCONVENTIONALS FOR CHEMICALS/PETROCHEMICALS
• Acetic Acid from Petcoke Gasification
• Synthetic Ethanol from Petcoke Gasification
• Targeting Olefin Generation from Petcoke/Lean Gas
• Recovery of Styrene from PyGas
C. UTILISATION OF STRANDED MOLECULES FOR SPECIALTIES
• Acrylates/Oxoalcohols/SAP from Propylene
• Cumene/Phenol/IPA from Propylene
• MMA/PMMA from C4’s
• DCPD/Piperlene/HCR from C5’s
• Specialty chemicals currently imported in the country
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Initiatives Planned for Future Growth
D. DEVELOPMENT OF GAS BASED PROJECTS
• Major transition in global landscape for petrochemical feedstock post development of shale gas and availability of cheap feedstock/fuel in US.
• IndianOil examining opportunities for collaboration with petrochemical players for setting up shale gas based, cost competitive Petrochemicals Complexes in US.
• Alternatively possibility of setting up petrochemical plant in India, on a coastal location, being explored by sourcing shale gas from USA – transportation remains a concern
• Objective – to enhance availability of low cost polymers in India
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Agenda
India – A Growth Perspective
Petrochemicals – A Vehicle for Growth
• Petroleum Refining – An Overview
• Eastern India – Observations
• Paradip Refinery – An Overview
• IndianOil in Petchems & Future Plans
• Imperatives for Growth
Summary & Conclusion
Imperatives for Promotion of Growth
• For balanced growth of Indian economy, measures need to be taken to increase the share of manufacturing in GDP to grow from current 15% to 25% by 2022.
• Key Commercial & Fiscal Issues
VAT/GST: India has one of the highest indirect tax incidences. Indirect Tax reforms required to bring in uniformity in rates across India and also to put a
check on cascading effects of existing Central and State VAT system would be imperative to support investment.
Key petrochemical inputs such as Naphtha should also fall under a national level VAT/GST regime at uniform rate across states, with complete input tax credit.
Duty rationalization going up the petrochemical value chain – Tariff level differntials for each link of the chain should be positive.
• Duality in fiscal structure has resulted in a high cost economy that discourages local investment
• Compelling reasons to remove duty anomalies prevailing in this sector so that
domestic investment becomes financially viable. • FTA’s – De novo re-assessment to facilitate a level playing field for domestic producers
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• Infrastructure
Critical enabler in enhancing competitiveness of industry to be able to produce and distribute goods both for the domestic market and for exports.
As a result of under-developed trade and logistics infrastructure, the logistics cost of the Indian economy is over 13%of GDP, compared to less than 10%of GDP in almost the entire Western Europe and North America.
• Regulatory initiatives
Mandatory standardization of products Promoting energy efficient building codes Aseptic packaging Mandatory unitized packaging of oil and other food products susceptible to
adulteration Overall interest of the economy and the society.
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Imperatives for Promotion of Growth
Imperatives for Promotion of Growth
• R&D Key factor for growth of the chemical industry Typically petrochemicals being a basic chemical industry the main focus will be
on Process optimization to reduce cost and Application Development to boost demand.
Huge amount of effort is also needed towards energy management since energy is a significant element of conversion cost.
• Alternative Feedstock Production from alternate sources like coal, bio-mass etc. These alternative
routes need to be explored with due incentivization from the Government.
• Human Resource Development Sustainable growth is not possible without trained human resource. Training
measures and facilities like Centers of Excellence need to be conceptualised and implemented
32
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Agenda
India – A Growth Perspective
Petrochemicals – A Vehicle for Growth
• Petroleum Refining – An Overview
• Eastern India – Observations
• Paradip Refinery – An Overview
• IndianOil in Petchems & Future Plans
• Imperatives for Growth
Summary & Conclusion
Summary & Conclusion
• Significant opportunity in domestic and neighboring market
• Petrochemical Projects would aim to achieve competitiveness by: Leveraging existing strengths in refining, marketing & supply chain Employing state of art technologies Building world scale capacities close to low cost feedstock/ demand centres Low cost revamps/Creation of grassroots integrated complexes Exploiting synergies available by integration with refineries
• Emphasis on C3/C4/C5 feed streams available from cracker • Enter into Niche segments in specialty chemical/elastomers • Development of Alternate sources of petrochemical feedstock like
Coal/Petcoke gasification, MTO/MTP, Deep Catalytic Cracking etc. • Explore opportunities for participation in international projects with
competitive feedstock pricing • IndianOil is looking for opportunities.….
Thanks !!