The domestic petrochemical sector offers tremendous opportunities as India is a major unexploited market with immense growth potential. India?s current per capita consumption of polyester is 1.4 kg, whereas China?s and global per capita consumption is five times and three times higher, respectively, of India?s per capita consumption. Similarly, the 5 kg per capita consumption of polymers is one-fifths the average per capita consumption of the entire world. India accounts for 3.1% of the total world polymer consumption of 200 mtpa.
Petrochemicals have niche properties that replace metallic and wood products. Wide application has accelerated demand for petrochemicals and hence this sector has shown an enviable rate of growth. It is crucial to the growth of the country?s economy as well as the growth and development of manufacturing industry in vital sectors.
The government is very keen to develop the petrochemical sector by providing facilities and level-playing field. To this end, it has put in place a national policy on petrochemicals and has initiated steps to create mega integrated complexes called petroleum, chemicals and petrochemicals investment regions (PCPIRs). Implementation of these plans requires large investment, new infrastructure and new R&D centres. The government has already identified the locations to set up giant PCPIRs, ie, Haldia-Nayachar (West Bengal), Dahej (Gujarat), Visakhapatnam (Andhra Pradesh), Mangalore (Karnataka), Cuddalore-Nagapattinam (Tamil Nadu) and Paradeep (Orissa). These PCPIRs will be set up in a 2,000 sq km area with an estimated investment of $280 billion. As 100% FDI is permissible in chemical industry, this should provide a boost to the sector.
Domestic petrochemical sector will double its production capacity in the next four-five years, considering the current trend in capacity addition. Also, through the PCPIR route, India is going to invest several billion dollars to increase petrochemical production capacities, leading to improved trading of feedstock, intermediates, final products both inside and outside the country. It will also provide great opportunities to players in the field of equipment designing, manufacturing, EPC, industrial automation, project and programme management. India?s revenues from the chemicals & petrochemicals sector, currently at $65 billion, could reach $200 billion by 2020, according to an estimate by the Indian Chemical Council.
Public sector companies like IOCL, MRPL, GAIL and private companies like RIL, HPL and Mitsubishi Chemicals are already present in the sector and expanding by enhancing current capacities through brownfield and greenfield projects. MNCs that have shown interest in participating in the development of PCPIRs in India are Total, Saudi Aramco, Shell, ExxonMobil Chemicals, Borealis and Itochu Singapore.
Key challenges in the petrochemical sector are volatility of prices, availability of desired feedstock, high emissions, low energy efficiency and the cyclical nature of the industry. Development of quality infrastructure, timely clearances, availability of land and water are also significant ingredients for the growth of this sector. Besides, technology also plays an important role.
Standalone petrochemical plants sometimes face feedstock supply risk which can be overcome by integrating the plants with oil refineries, the main source of feedstock or setting up of these units near natural gas pipelines. India might become a petrochemical hub in the near future by capitalising on its refining capacity. Domestic gas production has increased due to the start up of RIL?s KG D-6 field. Meanwhile, GSPC is also going to develop its giant gas finds.
As per 11th Plan, the projected surplus quantity of naphtha at the end of 2011-12 would be around 7.23 mmt from the existing and new refineries. They might be forced to sell naphtha at much lower prices in the international market. To avoid this situation in future, refiners can add value to naphtha by utilising it as feedstock for the production of petrochemicals domestically.
The development of clusters of small & medium industrial units for processing industries in the vicinity of integrated units will definitely align the up and downstream petrochemical companies due to better availability of raw material. Clustering of processing units would be very helpful to reduce the cost of and risks associated with transportation raw material.
Raw material and operational costs account for approx 80-82% and 18-20%, respectively. Installation of world-scale petrochemical units would help reduce operational costs, energy consumption, emissions per tonne of the produce and enhance manpower productivity. Petrochemical companies may benefit by introducing energy management in different processes of the plant, ie, utilities, fired heaters, heat exchangers. This should help reduce the pollutants significantly. To recycle carbon emissions, carbon dioxide coming out in flue gases can be captured in the recovery plant and recycled by using it as feedstock to produce urea and methanol.
Following best industry practices, involving shop floor men in continuous improvement in the processes, timely training of employees and awareness about safety aspects for man and machine would help the companies to get benefits in terms of enhanced productivity and improved energy efficiency.
India can use its great pool of talent to create best R&D centres to develop in-house, low-cost technologies in petrochemical and other sectors involving public and private sector players. That would save billions of dollars of cash outflow. We may also look forward to developing new applications and uses of petrochemicals and polymers to grow and maintain sustainability in the sector. New process development and improvement in catalyst would also help the sector to grow in new directions.