India s Current Position in the Petrochemicals Industry 6 th Annual Platts Asian Petrochemicals Markets 2017 April 19-20, 2017, Shanghai, China K.K.Jain, Executive Director (Petrochemicals-Projects) 1
Agenda IndianOil Important Pillar of Indian Economy Petrochemical World Changing Landscape Resurgence, Emergence, Divergence Asia s trades development India : A Force to Reckon Mega Trends fuelling Growth India Petrochemical Industries Production & Consumption Feed Stock Options Conclusion 2
IndianOil: Fueling Billion Lives Largest commercial enterprise 26 affiliated companies Employees > 33000 Networth US $ 11 bn Turnover US$ 61 bn PAT US$ 1.59 bn Largest Refiner Largest marketing Infrastructure Largest Pipeline Network IndianOil Total Refineries 11 23 Capacity, Mbd 1.6 4.6 3
IndianOil: Business Space Refining Marketing Pipelines R&D 11 out of 23 refineries country 1.6mbpd capacity > 4,000 Touch Points 88 mn LPG customers 577 mn bbl POL sales 46.7% market share 11,200 km Crude, Product and Gas pipelines Over 1.6 mbpd pipeline capacity Product formulations Development of Lube, Refining, NANO-tech, AE technologies developed in-house 384 Active Patents Petrochemicals Exploration & Production Natural Gas Alternate Energy 2 nd largest player Exports > 80 countries Naphtha Cracker SBR LAB Domestic: 8 blocks Overseas: 7 blocks (Includes 10% stake in integrated upstream & LNG project in Canada) Co-promoter in M/s Petronet LNG Ltd. R-LNG marketing CGD in 2 GAs Building LNG terminal at Ennore, Tamil Nadu Wind : 69.3 MW Solar: 5 MW 4000 ROs solarized scale-up capacity to 260 MW by 2021 Total Refining Petrochemicals Planned Investment till 2022-23 27 Billion USD 19 Billion USD 4 Billion USD 4
Changing Landscape Global disruptions leading to major shift in trade dynamics Resurgent US Shale Gas Revolution making US net exporter Cheap feed stock Ethane & NGL availability Attract investment into Ethylene derivatives Divergent China Shifting towards lower carbon energy mix Continue trying new feed stock options Moving toward self sufficiency & may turn from importer to exporter Emergence Middle East Increased financial burden under low oil scenario Leveraging feed stock resources for value addition Export of Petrochemicals India the consuming centre Fastest growing economy: will overtake US to become 2 nd biggest economy (PPP) by 2040 Double digit Petrochemicals growth Strong Transport fuel demand 5
India A Force to Reckon 1/6 th world population Largest two-wheeler manufacturer 18.5 Million 2 nd largest textile capacity 1.54 Million ton 2 nd largest producer of food in World 270 Million ton 4 th largest energy consumer 700 Million ton oil equiv 3 rd largest refining capacity 230 MMTPA 5th largest passenger vehicle market 4.53 Million >1 Billion mobile subscribers 6
India: The Growth Engine 8 7 6 5 4 3 2 1 0 Major countries projected Growth INDIA CHINA US WORLD 2016-20 2021-30 2031-40 2041-50 India ( 7.9 Bn USD) is projected to overtake US by 2040 in PPP to become 2 nd largest economy Source:PWC, world in 2050 2000 1500 1000 500 0 India Population Growth 2000 2005 2010 2015 2020 2025 2030 2035 2040 POPULATION IN MILLIONS More than 70% population below 40 Yrs Source:WorldOMeter 25 thrust sectors to push manufacturing: Automobiles Chemicals Oil & Gas Food Processing Digital India Construction 100 Smart Cities 65 Million new House by 2022 7
India Refining capacity Growth Healthy Growth in transport fuel SKO ( 8 MMTPA) demand getting replaced by LPG 250 200 150 100 50 0 117 90 94 94 127 127 132 99 231 213 178 149 145 130 106 106 83 86 73 44 27 33 33 33 2003 2004 2005 2006 2007 2009 2012 2017* PVT PSU Total Refinery Cap 330 MMTPA by 2025 through capacity revamp Mega Refinery at west coast 8
India Polymer Growth Trend * Includes LL + HD+ LD+ PP+ PS+ PVC+ Ex-PS India bulk Polymer consumption of 7.6 kg/capita (excluding recycled polymers) far below world average of 35kg/Capita Polymer consumption accounted 7% CAGR during past 7 years Imports tripled in past 8 years, growing @ 15% CAGR In Terms of Petrochemical Capacity, India is at where China was 15 years ago 9
Petrochemicals Derivatives import India Petrochemical imports in 2015-16 & 2023-24 6000 5000 5542 Year Capacity kta Demand kta % Import Dependence 4000 2015-16 16141 25298 33 3000 2000 2589 2435 2110 1816 1780 2023-24 26619 44005 46 1000 1096 1040 671 660 598 342 331 244 220 216 193 176 0 2023-24 2015-16 Petrochemical Derivatives: Opportunity yet to be tapped 10
C1 Derivatives: Supply demand Outlook CAGR : 4.2% CAGR : 5,7% ACETIC ACID Demand growth primarily driven by Acetic- Anhydride & PTA Majority of present production through Fermentation route Source: Nexant METHANOL Demand driven by Pharmaceutical, Formaldehydes & Acetic Acid Restricted natural gas availability Power generation and Fertiliser production priority for NG allocation Methanol to Olefins remains untapped 11
C2 Derivatives: Supply demand Outlook PE* : HDPE+LLDPE+LDPE CAGR : 6.7% CAGR : 9.5% PVC* : PVC+EDC+VCM CAGR : 6.5% PE & MEG OPAL & ROGC commissioning in 2017-18 Temporarily surplus situation in PE W.C. Refinery to reduce deficit in PE and MEG PVC Deficit growing @ 9.8 % No new Capacity addition Ethylene & Chlorine availability at one place Power availability Source: Nexant demand 12
C3 Derivatives: Supply demand Outlook CAGR : 8.6% CAGR : 9.0 % CAGR : 8.5% PHENOL & POLYOLS Old sub capacity plant in operation 200 KTA plnt announced in Pvt. sector PSU evaluating putting up capacity ACRYLATES No Cap at present PSU putting up 190 KTA plant Another plant under study Manali Petro & BASF with small Cap Expansion & New cap planned Source: Nexant 13
Polypropylene & PTA: Supply demand Outlook CAGR : 6.7% CAGR : 8.3 % POLYPROPYLENE Surplus 1040 KTA Addln Cap by 2019-20 PSU evaluating putting up > 4000 KTA Capacity PTA Present Surplus 1200 KTA plant announced in Pvt. sector PSU evaluating putting up capacity Source: Nexant 14
Other Petrochemicals: Supply demand Outlook CAGR : 5.2% CAGR : 8.0 % CAGR : 3.7 % STYRENE No capacity PSU studying putting up plant TOLUENE No Capacity Import cheaper LAB Almost balanced situation One plant of 120 KTA for long run Source: Nexant 15
Petrochemical feed stock requirement Feedstock Requirements for top imported Petrochemicals in 2023-24 Product Quantity Ethylene Propylene Benzene Chlorine CO/Syngas PVC+ EDC + VCM 5543 2452 3541 MEG 1816 1071 PE 2110 2110 PTA 2589 4583 Phenol 216 108 166 PP 1780 1780 Polyol 342 185 Styrene 660 185 455 Methanol 2435 7914 Acetic Acid 671 322 VAM 220 81 161 EVA 244 181 LAB 331 1820.5 TOTAL 6081 2073 622 3541 8396 4583 1821 Naphtha (for C2 & C3) 18098 Total Naphtha (For Olefins + Aromatics) 22680 Petcoke (for Methanol) 8732 Kerosene (for LAB) 1821 Common Salt: 5840 KTA *Almost 6 World-scale Crackers are required to fulfill the Ethylene capacity (6* 4 Bn USD = 24 Bn USD) Aromatic Naphtha Kerosene 16
Petrochemicals: Naphtha Export SPREAD: $/TONNES NAPHTHA EXPORT TREND, KTA QTY, KTA 8,309 8,592 8,048 6,885 7,302 5,974 DATA SOURCE;PPAC 4,185 2,735 3,104 3,314 2,578 712 At Current prices, Naphtha Crackers competitive with Gas Cracker India turned net exporter w.e.f. 2004-05 Value sufficient for 2 Naphtha cracker Naphtha export from scattered locations but largely concentrated in West 17
India: Petrochemicals drivers Epicentre of Growth Transport fuel @ 6-10% Petrochemicals @ double digit Low Naphtha prices favours Olefin cracker Pet coke / Coal availability Stable and majority Govt. after two decades Conducive policy for industrial growth Make In India Focused infrastructure development 100 Smart Cities Reform of fiscal measures Simplification of FDI Approval process Goods & Services Tax (GST) roll out by June 2017 18
Petrochemicals: Feed stock Options Naphtha Pooling Two World scale crackers Release Naphtha through NG replacement One World scale cracker Release SKO through higher LPG penetration Convert into ATF / HSD and release Hy. Naphtha Pet coke ( 15.0 MMTPA) / Coal utilisation ( 600 MMTPA) Condensate based cracker ( 8000 9000 Mbbl/day by 2020) Reform of fiscal measures Expansion / New Petrochemical refinery Existing refineries expansion with Petrochemicals (100 MMTPA) Mega Petrochemical Refinery 19
Conclusion With market of > 1 Bn consumer with increasing purchasing power, local manufacturing is a compelling idea GDP growth will be maintained at 7% + in near term Stable majority Govt. in place after two decade Policy conducive to industrial growth. Make in India Digital India Growing Middle class and large consumer base India a favourite investment destination Industrial peace in most part Great Opportunity to put up Petrochemicals Plant 20
Xièxiè 21