India’s largest refiner and oil marketing company, Indian Oil Corporation (IOC), is conducting feasibility studies to set up a petrochemical complex at Paradip in Odisha for R20,000 crore, said Debasis Sen, director (planning & business development) at the government-owned firm.
The petrochemical complex would be built in the vicinity of the company’s to-be-commissioned 15-million-tonne-per-annum (mtpa) greenfield refinery at Paradip, which is likley to be ready in FY16.

Sen told FE that the petrochemical complex would be in addition to the already announced R3,150-crore poly propylene project at the same location. On November 16, minister of state (independent charge) for petroleum and natural gas, Dharmendra Pradhan, laid the foundation stone for the unit in the port city of Paradip.

“We are currently doing feasibility studies on the molecules, which I cannot disclose due to trade secrets. The work on the petrochemical complex would start after the refinery is commissioned,” the director said.

In a petrochemical complex, ethylene derivate complex is used to manufacture value-added products such as mono-ethylene glycol (MEG) and polyvinyl chloride (PVC). Monoethylene glycol has a wide range of uses, from making polyester chips, PET bottles and industrial yarn to coolants, paints and wire enamels, among others.

The PSU firm saw revenues from the petrochemical business grow 38% in the second quarter of FY15 to R5,343.04 crore from R3,874.73 crore in the same quarter last year. IOC targets to aggressively increase market share in the petrochemical business. In FY14, it garnered R18,125.73 crore from the segment.

Currently, Reliance Industries generates maximum revenue from petrochemical production. In the July-September quarter of the current fiscal, its revenues from the segment were R24,932 crore. In FY14, RIL made R96,465 crore from the petrochemical segment.

Natural gas transporting and marketing company GAIL (India) is another manufacturer of petrochemicals. It recorded revenues of R1,281.41 crore for the business in the second quarter of FY15. In FY14, GAIL reported R4,537.2-crore revenues from the petrochemical segment.
IOC, in its endeavour to diversify and grow as an integrated energy company, has made the petrochemical business one of the priorities,
Sen explained.

The industry’s structural oversupply and increased exports from China will keep Asian refining margins under pressure over the next 12-18 months, Moody’s said in a report released on Thursday.

According to Moody’s, Asian refiners will see aggregate Ebitda grow by around 5% through 2015, with the higher output of refined oil products more than offsetting the impact of weak refining margins on earnings.

China will continue to fuel demand for refined products in Asia, albeit at a slower pace than in previous years amid softer economic trends.

Moody’s expects Chinese demand for refined oil products to increase by 3-5% in 2015, compared to 5-10% over 2010-12.