A study on future outlook on the organic chemicals industry by Tata Strategic Management Group states that the Indian petrochemical industry is poised for a growth of 12-15% over the next 5-7 years and this is expected to translate into investments of US$12-15 bln for the chemicals industry.
At current prices, the downstream petrochemical industry production is expected to increase from the current US$15-18 bln to US$30-35 bln in the same period.
India's refining capacity is expected to increase from 135 mln tpa in 2006-07 to 210-225 mln tpa by 2011-12, leading to an export surplus of refined products to the tune of 78-93 mln tpa by 2011.
India refinery sector has been the top merchandise exporter for the period of April to October 2006. This growth in refining capacity is led by Reliance, which on the threshold of completion of its 29 mln tpa second refinery in 2008-09.
Reliance would then have added 62 million tons of capacity in a decade, comparable to 67 mln tpa capacity of the entire regional refining hub in Singapore.
Along with Reliance's second refinery, Essar would be commissioning a new refinery with a capacity of 10.5 mln tpa, apart from capacity additions and greenfield projects by PSUs to the tune of 35-50 mln tpa.
This growth, estimated to be nearly 60% by the study, would lead to availability of 8-10 mln tpa of naphtha by 2011. The power and fertilizer operations will reduce use of naphtha by 2.5 mln tpa by 2011, adding to the quantity of naphtha available in the country to 12.5 mln tpa. Driven by this proposed increased availability of naphtha, Indian major petroleum players like Reliance, Oil & Natural Gas Corporation, Hindustan Petroleum Limited, Mangalore Refinery and Petrochemicals limited, have already announced major downstream expansions in naphtha crackers.
The olefinic base chemical capacity is expected to increase from 4.5 mln tpa to 8-10 mln tpa, while aromatic base chemical capacity is expected to increase from 3.2 mln tpa to 5-6 mln tpa over the next 5-6 years. Vertical integration of these base chemical capacities would lead to near doubling of capacity in fiber intermediates, and basic petrochemical end products.
The study predicted that in the next 5-6 years, the Indian petrochemical sector could become a regional production hub. This would translate into availability of base petrochemical products for further processing in numerous customer applications, together with availability of building blocks like olefins and aromatics for other organic chemicals, at globally competitive costs.