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Petrochemicals: Opportunities and Challenges

5th October, 2018

Sandeep Poundrik

Joint Secretary (Refineries)

Ministry of Petroleum & Natural Gas

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Petrochemical Growth World scenario

Source: IEA; Nexant; A.T. Kearney analysis

mmboe: million barrels of oil equivalent

Petrochemical demand grows much faster than energy (Mainly oil)

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Petrochemical Intensity

Formosa, Taiwam : 38%

Fujian, China : 38%

Exxon, Jurong/

Pulau Ayer Chawan : 20%

RIL (only Jamnagar) : 15%

Source: HIS Markit

Indian Economy Overview

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Indian Polymers demand grows at 1.5

times of GDP

Petrochemicals Growth Indian scenario

Source: CPMA

World average

Import: 2017

• Top 87 Petrochemicals and

Chemicals

• Volume: 14 MMT

• Value : Rs 77,900 crore

• Top 15 Petrochemicals and

Chemicals

• Volume: 5.3 MMT

• Value : Rs 36,092 crore

Source: ICIS

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• Strong linkage with GDP.

• Demand to be 48 MMT compared to 14.6 MMT at present to

match world average of 32 kg/capita

• Increase in 1 kg/capita consumption requires a cracker of 1.5

MMTPA capacity every year. Thus the Gap is huge and challenge

enormous

• Requires comprehensive plan for location of crackers,

infrastructure of import of feedstock and downstream

application hubs.

Projected Demand for Polymers

Historical Domestic Demand of Major Petrochemicals (KTPA)

End Product

2009-

10

2010-

11

2011-

12

2012-

13

2013-

14

2014-

15

2015-

16

2016-

17

Polyvinyl Chloride (PVC) 1738 1939 2144 2389 2574 2622 2936 3158

Polypropylene (PP) 2382 2579 2830 3176 3276 3500 4250 4460

HDPE 1303 1268 1302 1657 1657 1947 2123 2372

LLDPE 1059 1467 1474 1529 1523 1450 1779 1734

LDPE 348 363 379 434 428 489 551 566

Polyether Polyols 83 146 160 179 180 201 237 226

Polycarbonate (PC) 53 102 114 120 121 122 134 135

Styrene-Butadiene Rubber 157 195 214 207 244 263 267 290

Ethylene-vinyl Acetate

(EVA) 78 100 95 118 125 145 166 143

Butyl Rubber 66 70 82 78 79 83 91 100

Acetic Acid 523 614 705 801 815 866 942 993

Acrylonitrile Butadiene

Styrene (ABS) 114 131 134 147 165 177 207 220

Other (Basic Major

Petrochemicals) 4361 4401 4171 4137 3899 4394 4139 4073

Total (Basic Major

Petrochemicals) 12265 13375 13804 14972 15086 16258 17822 18470Source: Department of Chemicals and Petrochemicals (MoCF)

Demand Forecast– Major Products

Product

Yr 2017 Capacity Yr 2025 Yr 2030 Yr 2040

Supply Demand GapInstalled+ under

ConstructionDemand Demand Demand

1Polyvinyl

Chloride (PVC)1444 3085 1641 1482 5885 7610 11425

2Polypropylene

(PP)4707 4486 (221) 8385 9440 13335 22735

3LLDPE+HDPE

+LDPE4131 5045 914 7683 10430 15068 29493

4 MEG 1608 1985 377 2400 3073 3740 5030

5SBR/

Butyl Rubber143 399 256 470 803 1166 2172

6 Acetic Acid 420 966 546 633 1320 1534 2022

7 Butyl Acrylate 0 164 164 340 254 325 529

Number in parenthesis ( ) show surplus

Petrochemical Demand- Historical and Forecasted

Role of Oil PSU’s in Petrochemicals

Successful integration to diversify into Petrochemicals

Major Oil and Gas PSU’s have announced significant investments in Petrochemicals

Expected to save USD 7 billion over entire life cycle by reducing imports

Owner Nos. Feedstock Design Capacity

(KTPA Ethylene)

GAIL 1 C2 860

HPL 1 Naphtha 700

PNCP 1 Naphtha 857

RIL 5 Gas+Naphtha 3580

BCPL 1 Gas+Naphtha 220

OPaL 1 Gas + Naphtha 1060

Total 10 7277

Existing Petrochemical Complexes

Installation Feed stock Ethylene

capacity, KTA

Products

RRL, Rajasthan LPG + Naphtha 900 LLDP/HDPE/PP/ BUTADIENE/ BTX

HPCL- GAIL JV,

Kakinada

Ethane + Naphtha 1000 LLDP/ HDPE/ PP/ PVC/ MEG/ BTX

RRPCL, Ratnagiri Off gases+ LPG +

Naphtha

5 X 1500 LDPE/ LLDP/ HDPE/ MEG/ PP/

PVC/ PX-PTA/ EPR/ Acrylate

/Styrene

BORL Multiple feeds

(Naphtha/ Fuel

gas/ LPG/ HCB)

2000 LLDP/ HDPE/ PP/ Styrene

BPCL-M 1000

MRPL 1000

Total (10 Nos) 13400

Upcoming Crackers up to 2030

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Cracker capacity will be tripled by 2030

Challenges of Petrochemical Industry

• Availability of Feed stocks

• Availability of Technologies

• Capital

• Economy of scale

• Trade Flows from feed stock advantaged countries

Investment for 1500 KTPA ethylene cracker

• 100% Gas feed: Rs 40,000 crore

• Dual feed : Rs 45,000 crore

• Alternative feed stock: Ethane / Propane/ Condensates/ LPG / Methanol

may be explored for olefins

• Propylene by Propane Dehydrogenation (PDH)route.

• Methanol can be produced from Coal/ Petcoke and deasphalted residue.

• Gas to Olefin Technology: emerging Technology

• Joint venture with feed stock suppliers

• Crackers to be designed for multiple feed stock

• Integration with petrochemicals in any new or expansion of existing

Refinery to ensure feed stock advantage and Infrastructure integration

Maximising Feedstock Availability: Options

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• At current crude oil price, Ethane can be considered as feed

• Need to focus on alternative feedstock and infrastructure for import

of feedstock

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Plan more Refining CapacityRefining industry at Crossroads

• Reduction in emission intensity of GDP

by 33-35%

• Reduce Specific Energy Consumption

Reduce Carbon footprint

Reduce water footprint Reduce dependency on ground water /river

Reduction in import dependence by 10%

by 2022 Reduction in Crude Oil Import

Move away from Petcoke and Fuel Oil

Product QualityEnvironmental Issues

Diversification / Readiness incase of

Disruption

• Integration with Petchem

• Integration with Fertilizers

Emerging trends & DriversRefining Sector

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Refinery – Petrochemical Integration

Advantages

Refinery Petrochemical

CDU/VDU

FCCU

CRU

Steam

Cracker

Aromatics

Ethylene

Propylene

PP

PE

Styrene

MEG

Propylene

Off-gases

C4 Raffinate

Naphtha

LPG

H2

PFO

C9 Stream

Py gas

C7/C8 Aromatics

Benzene

Toluene

PX/PTA

PET

Butadiene

ABS

PVCPO

PFEpoxy

Polyurethane

� Monetisation of standard /

return streams (Py gas,

Naphtha)

� Integrated Management of

Utilities and H2

�Hedges both segments

against cyclical performance

� Indicative IRR of Typical

configuration:

• Standalone Refinery:

11-12%

• Integrated Refinery &

Petrochemicals: 16-17%

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Upcoming Greenfield Projects

West Coast Refinery Project: Rs 2.3 lakh crore (46 billion USD)

• IOCL: 50%; BPCL: 25% & HPCL: 25%; Refining capacity: 60 MMTPA

• Target Products:

• Commodity Petrochemicals: LLDPE, PVC, PX/PTA, HDPE, PP

• Niche Petrochemicals:, EPR, Acrylate, SAP, LDPE

• Chemicals: Sulphuric Acid, Caustic Soda

• Fuels: MS, HSD, ATF

Rajasthan Refinery Project

• Govt. of Rajasthan: 26% & HPCL: 74%

• Refining capacity: 9 MMTPA

• Petrochemicals: BTX, LLDPE, HDPE, PP,

Butadiene

• Project cost: Rs 43,129 crore

Petrochemical complex, Kakinada, AP

• Partners: HPCL & GAIL

• Petrochemicals (Feed: Imported

Ethane & domestic Naphtha): BTX,

LLDPE, HDPE, PP, PVC, MEG

• Project cost: Rs 32901 crore