The largest refinery companies in India (Indian Oil, Bharat Petroleum and Hindustan Petroleum) are preparing to invest $35 billion in petrochemicals to meet high demands for goods such as plastics, paints and adhesives. According to executives at the Chemical and Petrochemical Manufacturing Association, India’s petrochemical usage is 25% of the world’s average and half of the country’s petrochemical consumption is imported. However, they forecast demand to rise an extra 10 million tons to 40 million tons within the next 3 years, which will result in a $65–$70 billion petrochemical market in India.

In July, Petroleum minister Dharmendra Pradhan indicated the government’s plans to set up petrochemical companies around refineries in the Eastern, Western and Southern regions of the country. Bharat Petroleum and Hindustan Petroleum plan to spend $15 million over a five-year period to raise the Indian petroleum industry’s share of total revenue to 10%. Indian Oil will invest INR 300 million ($4.7 million) over the next 5–7 years to increase petrochemical revenue to 33% of revenue. Cumulatively, the three companies are preparing to invest a total of INR 2.7 trillion ($42.3 billion) to create the world’s largest crude refinery in Western India, linked to a petrochemical plant, with an output capacity of 1.2 million barrels/day. The petrochemical plants serve as alternate revenue for the petroleum companies and add to their “gross refining margins,” making it a good “de-risking model,” according to a chairman of Hindustan Petroleum.

Source: Reuters