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The Indian petrochemical industry is poised for a growth of over 10% over the next five years from 2006. This is
higher than the current growth rate of 3-4%, and is expected to translate into investments of US$12-15 billion for the
industry. At current prices, downstream petrochemical production is expected to increase from current levels of
US$15-18 billion to US$30-35 billion over the next 5 years. Petroleum ministry estimates peg India's refining capacity
to increase from 135 mln tpa in 2006 to 210-225 mln tpa by 2011. This would create an export surplus of refined products
of 80-90 mln tpa by 2011.
Reliance will be adding 62 mln tons of capacity in a decade, comparable to the entire capacity of the regional
refining hub in Singapore, which has a refining capacity of 67 mln tpa. Reliance was able to secure a price of
US$2-3 per barrel from its first refinery since inception, better than the refining margin of the Singapore complex,
proving its global competitiveness.
In addition to Reliance's second refinery (29 mln tpa), Essar will be commissioning a new refinery with a
capacity of 10.5 mln tpa, apart from capacity additions and green field projects by the public sector undertakings
pegged at 35-50 mln tpa. This growth, estimated to be nearly 60%, would lead to availability of 8-10 mln tpa of naphtha by
2011. Power and fertilizer sectors will cut the use of naphtha by 2.5 mln tpa by 2011, increasing availability of naphtha
in the country to 12.5 mln tpa. Riding on the back of this increased availability of naphtha, the major petroleum players
like Reliance, Oil & Natural Gas Corporation, Hindustan Petroleum Ltd., Mangalore Refinery and Petrochemicals Ltd.
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 years. Vertical integration
of these base chemical capacities would lead to near doubling of capacity in fiber intermediates, and basic petrochemical
end products.
In the next 5-6 years, the Indian petrochemical sector could become a regional production hub. |