Picture: Indian subcontinent refineries, via ppPLUS
India’s dependence on imports to meet its requirements of basic petrochemicals, including polymers, is only expected to rise, despite projects – under implementation and on the drawing boards. This is partly because the historical baggage of poor capacity builds will take time to catch up with rising demand.
In the last few years, however, India’s public sector refiners have climbed on the petrochemicals bandwagon, seeking value-added outlets for refinery streams. They have invested in aromatics (for feeding the polyester value chain), propylene (for polypropylene, PP, and some other chemicals notably, oxo-alcohols and acrylate monomers), linear alkyl benzene (LAB), a key detergent raw material, and a few other projects. And more are to come in the near-term.
There are several commonalities amongst the firm projects. For one, the emphasis seems to be on building the C3 (propylene) value chain. This is not surprising as FCC propylene offers a simple, low-cost route to the olefin and one that can be conveniently retrofitted into existing refinery operations. There is also an overwhelming emphasis on PP production, which may not be wise, as it runs the risk of overbuild should demand growth not pan out as anticipated.
There are other propylene derivatives that can be considered, and these merit attention if not by the refiners themselves then by third party investors for whom it will be more worthwhile. Much will hinge on the commercials of the olefin supply arrangement, but such business models are widely followed, including here in India, let alone in other countries.
Importantly, the government needs to recognise that the chemical industry as a key enabler of modern living, and not a nuisance to be constrained through regulation and red-tape. The priority must be on developing well-developed clusters where not just the petrochemical industry, but also the broad chemical industry – including the fine and specialty chemical industries, wherein India’s competitiveness is well recognised – can locate and start operations in double-quick time. Clusters are efficient and safe locales where the industry can thrive, as several countries have amply shown.
India needs a much larger and more diversified chemical industry than it has now. The former it seems is happening. Not so sure of the latter. The herd mentality to investments needs to change. Those who have dared to do so – and there are a few examples – have been amply rewarded. More need to emulate, not imitate, them!
Ravi Raghavan, 12 Nov 2024, Linkedin post.
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Kokel, Nicolas
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