Petrochemicals: Opportunities and Challenges Sandeep Poundrik Joint Secretary (Refineries) Ministry of Petroleum & Natural Gas 5 th October, 2018 1
Petrochemical Growth World scenario mmboe: million barrels of oil equivalent Source: IEA; Nexant; A.T. Kearney analysis Petrochemical demand grows much faster than energy (Mainly oil) 2
Petrochemical Intensity Formosa, Taiwam : 38% Fujian, China : 38% Exxon, Jurong/ Pulau Ayer Chawan : 20% RIL (only Jamnagar) : 15% Source: HIS Markit 3
Indian Economy Overview
Petrochemicals Growth Indian scenario Import: 2017 Top 87 Petrochemicals and Chemicals Volume: 14 MMT Value : Rs77,900 crore Top 15 Petrochemicals and Chemicals Volume: 5.3 MMT Value : Rs36,092 crore World average Indian Polymers demand grows at 1.5 times of GDP Source: ICIS Source: CPMA 5
Strong linkage with GDP. Projected Demand for Polymers 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. 6
Historical Domestic Demand of Major Petrochemicals (KTPA) 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 End Product 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 Source: 14972 Department 15086 of Chemicals 16258 and Petrochemicals 17822 18470 (MoCF)
Demand Forecast Major Products Product 1 Polyvinyl Chloride (PVC) 2 Polypropylene (PP) 3 LLDPE+HDPE +LDPE Yr 2017 Capacity Yr 2025 Yr 2030 Yr 2040 Supply Demand Gap Installed+ under Construction Demand Demand Demand 1444 3085 1641 1482 5885 7610 11425 4707 4486 (221) 8385 9440 13335 22735 4131 5045 914 7683 10430 15068 29493 4 MEG 1608 1985 377 2400 3073 3740 5030 5 SBR/ Butyl Rubber 143 399 256 470 803 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, Ethane + Naphtha Kakinada RRPCL, Ratnagiri Off gases+ LPG + Naphtha BORL Multiple feeds (Naphtha/ Fuel gas/ LPG/ HCB) BPCL-M 1000 MRPL 1000 Total (10 Nos) 13400 Upcoming Crackers up to 2030 1000 LLDP/ HDPE/ PP/ PVC/ MEG/ BTX 5 X 1500 LDPE/ LLDP/ HDPE/ MEG/ PP/ PVC/ PX-PTA/ EPR/ Acrylate /Styrene 2000 LLDP/ HDPE/ PP/ Styrene Cracker capacity will be tripled by 2030 13
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
Maximising Feedstock Availability: Options 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 At current crude oil price, Ethane can be considered as feed Need to focus on alternative feedstock and infrastructure for import of feedstock 15
Emerging trends & Drivers Refining Sector Refining industry at Crossroads Plan more Refining Capacity Reduce Carbon footprint Reduction in emission intensity of GDP by 33-35% Reduce Specific Energy Consumption Reduce water footprint Reduce dependency on ground water /river Reduction in Crude Oil Import Environmental Issues Reduction in import dependence by 10% by 2022 Move away from Petcokeand Fuel Oil Product Quality Diversification / Readiness incase of Disruption Integration with Petchem Integration with Fertilizers 16
Monetisation of standard / return streams (Pygas, Naphtha) Integrated Management of Utilities and H 2 Hedges both segments against cyclical performance Indicative IRR of Typical configuration: Standalone Refinery: 11-12% Integrated Refinery & Petrochemicals: 16-17% Refinery Petrochemical Integration Advantages Refinery FCCU CDU/VDU CRU Propylene Off-gases C4 Raffinate Naphtha LPG H 2 PFO C9 Stream C7/C8 Aromatics Petrochemical Steam Cracker Pygas Aromatics Ethylene Propylene PP PE Butadiene MEG Styrene PVC PO ABS Benzene Toluene PX/PTA PET PF Epoxy Polyurethane 17
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Upcoming Greenfield Projects West Coast Refinery Project: Rs2.3 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 Petrochemical complex, Kakinada, AP Partners: HPCL & GAIL Petrochemicals (Feed: Imported Ethane & domestic Naphtha): BTX, LLDPE, HDPE, PP, PVC, MEG Project cost: Rs 32901 crore 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 19