International Petrochem Conference 2008 organized by CII

The petrochemical industry voiced its concerns at the International Petrochem Conference 2008 organized by Confederation of Indian Industry (CII) in Mumbai after Chidambaram imposed an import duty of 5% on Naphtha in the Budget. "There are tremendous opportunities for growth and investment both in upstream and downstream Indian petrochemicals industry," Paswan said today at the CII conference. He emphasized that the petrochemicals industry plays a major role in addressing basic requirements in the areas of food, water, security, shelter, clothing and textiles, healthcare and social and physical infrastructure. "The key will be innovation and keeping pace with the changing habits and expectations of customers. The present domestic per capita consumption of polymer is 4.8 kg per person as against the world average of 25 kg,", highlighting the huge potential in the petrochemicals sector and giving rise to tremendous opportunities. He further explained the initiatives taken by the Department of Chemicals & Petrochemicals towards implementation of the National Policy on Petrochemicals. "The Department of Chemicals has constituted an Inter-Ministerial Group on Development of Plastics, identified thrust areas and undertaken various feasibility studies for implementing Policy measures," Paswan said. Tackling the environmental concerns, he made it clear that plastic by nature was recyclable and that 30-40% of plastics could be recycled. "Lack of awareness about plastics and appropriate mechanism for segregation and disposal of plastic waste is the main problem. Concerted efforts by the Government, industry and NGO's are required to bring awareness about the proper disposal of plastic waste and developing mechanism for systematic waste collection and recycling," Paswan said. The keynote speaker Peter Jordan of Dewitt & Co, UK, underlined the better cost competitiveness enjoyed by the new petrochemical plants in the Middle East, thanks to abundant availability of natural gas feedstock. However, a number of new projects have slipped on the time schedule due to rising capital costs of setting up plants. These projects were conceived targeting the consumption growth in India. As they start commissioning one-by-one over next five years, India's domestic prices of petrochemicals and polymers would start facing pressure. B. P. Pandey, Joint Secretary, Department of Chemicals, addressed the session on "Economic Outlook and Petrochemical Industry/Alternate Feedstock". He said that the key to competitiveness was to look at alternate feedstock for the petrochemical industry. "In order to achieve the growth rate of about 10%-11% in the petrochemical sector, downstream growth should be in tandem with upstream growth," Pandey said. KG Ramanathan, petrochemicals advisor to Reliance Industries, said the future of the industry does appear somber. However, with India's consumption growth story intact, the demand for polymers is expected to grow at 9-10% per annum taking India's total consumption to 10 million tonne by 2012 from current 5.5 million tonne. "If we have to move to the next stage and compete with the Middle East producers, we have to bring in new technologies. For this we need to change our mind set to look at alternate feedstock such as coal. K.G. Ramanathan touched on global recession or slow down and its impact on the growth of global ethylene demand. "As Indian economy becomes integrated with world economies, any major changes will lead to some impacts. Fluctuations in exchange rates and turbulence in financial markets an oil prices will have an impact on world economy," Ramanathan said. Highlighting the gap in demand supply of polymers, he said that the issue was whether the gap of 3-4 million tons of polymer consumption would be met with growing imports or building internal capacities. The International Petrochem Conference 2008 had panelists discussing and debating on the feedstock scenario with Dr. U. D. Choubey, Chairman and MD, Gail India emphasizing on the importance of naphtha and natural gas as the two traditional resources of petrochemical products. "Recent development in Naphtha prices and volatility in crude prices have created an adverse impact on Naphtha led petroleum products. What is required is a paradigm shift from the traditional source of Naphtha to clean coal technology," Dr. Choubey said. Earlier in his welcome address, S. K. Bhowmik, Chairman, CII National Committee on Petrochemicals & Managing Director of Haldia Petrochemicals Ltd. (HPL) pointed out that the Indian petrochemicals industry was one of the interesting and dangerous sectors to be in. "With increase in prices of crude oil and Naphtha, alternate energy sources like coal are being looked at with increasing intensity," Bhowmik said. Haldia Petrochemicals managing director SK Bhowmik, said: "The Indian petrochemical industry is on the borderline of feasibility, and huge investments are needed to stay globally competitive." Global consumption of petrochemicals is being driven by India and China, but most capacity addition is happening in the Middle East. As the naphtha prices soar in line with the crude oil, the Indian petrochemicals industry is facing challenges from the cheaper imports from the Middle East and China. Mr Bhowmik said: "In the past, the per capita steel consumption was treated as a sign of the country's prosperity. However, now a number of experts consider the per capital consumption of plastics as a measure of economic growth. India's per capita consumption of plastics at 5 kg per annum is miserably low compared to China's 25 kg and US' 118 kg." Amitava Banerjee, vice-president (technology), Lurgi India, elaborated on the new technology concept highlighting the benefits of using coal as petrochemical feedstock. "Using coal as a feedstock can be nearly 10 times cheaper compared to naphtha and natural gas. Considering India's huge coal reserves and limited crude oil or natural gas reserves, it is certainly recommended that we adopt new technologies to utilise this resource."