Most of the petrochemicals industry experts agree that to thrive and be a part of a growing economy, reconfiguring existing refineries and new crackers are critical, infrastructure building, course correcting the strategy for PCPIRs, incentives for the local players, and better coordination between states and central government are among the few key industry expectations.

Saugata Chaudhuri, Head - Petrochemicals Marketing, HPCL is bullish about the growth of the petrochemical industry and believes that good days are around.

“In Indian context, the demand for petrochemicals will be driven by factors such as growing middle class, rapid urbanization, food and water security, healthcare, and infrastructure push. The sector will continue to grow across all segments. The demographic dividends, increasing finished product exports, and rising income levels are few of the few key catalysts for this demand,” says Chaudhuri who spoke at the E-conference on 'Petrochemicals: Positioning India as a Hub by 2035’ organized by Indian Chemical News on March 15, 2022.

The well attended session witnessed discussion by leading industry experts and was moderated by Pravin Prashant, Editor, Indian Chemical News.

“Although the major investments in India are concentrated around C2 and C3 chains, for example Cumin Phenol, Iso-Proply Alcohol and Acrylics, the increasing investments are being witnessed in C6 that is benzene derivatives, and also C8 that is paraxylene. In 2021, the total chemical and petrochemical industry was valued at US $63 billion. This in itself reflects the astounding investment opportunity in the Indian petrochemical industry. The winning formula will be finding balance between the financials and sustainability,” adds Chaudhuri.

“India is a fast emerging global petrochemical hub and projected to contribute to 10% of incremental global growth over the next decade. Having a per capita consumption which is comparatively far lower to the global average, a deeper penetration is quite natural. It has the potential to become one of the strongest growing segments of the economy. The end sectors such as automobiles, building, infrastructure or packaging, all are showing growth. Petrochemicals can become a driver for the oil and gas sector which is witnessing new shifts,” says Tarun Kumar, GM - Petrochemical Marketing, BPCL.

“As per the CRISIL report on Indian outlook, it is expected that MS will have a growth of 2% by 2025 and which is going to throttle down to 1% by 2030. The impact is going to be slightly on the CNG for the shorter horizon but for the longer horizon, electric vehicles are going to get displaced. Diesel is slightly better but there also the growth is going to be stunted. So the Indian refinery industry is in the search of better realizations, better margins, and is looking at improved technologies, with the integrated plants becoming the key. With the current level of imports and dependence on some of the petrochemical derivatives, overall petrochemical demand and capacity expansion, placing the right portfolio. Overall it looks very promising and India has all the right ingredients to become a hub,” adds Kumar.

Bhaskar Jyoti Phukan, Director -Technical & Managing Director, Numaligarh Refinery Limited whose company is not a petrochemical player but aspires to be a producer in the near future is equally confident about the growth prospects.

“We have configured the refinery which will support petchem production and we are bullish about the demand. We realize the future of the refinery on a long-term sustainable path is going towards petrochemicals. So all the refineries without exception are trying to increase their petrochemical index and we as a refinery will get into around 3% petrochemical index by 2024 and finally land up at around 11% by 2030. We have big investment plans. Initially we will remain in the commodity petrochemicals, and later into the niche petrochemicals.”

Highlighting the pain points, Chandan Sengupta, Senior Advisor - Marketing & CBT, Haldia Petrochemicals Limited, says, “India last year on the Chapter 29 of customs imported US $15 billion worth of products and Chapter 39 was US $13 billion products. We can talk about Aatmanirbhar Bharat but we can't make these because these constitute 500 different products. Having said that, the reports of IHS and McKinsey state that from 13 million tonnes consumption during 2020 in India, it is expected to be 31 million up to 2030. This brings up the fact that India requires a new cracker every 13-14 months. There are opportunities and demand in India but for these to turn into reality, we shall require new initiatives and interventions from both state and central governments. We should focus on removing roadblocks.”

"We can become a hub if we improve the infrastructure as this will give you indirect employment. If we don't focus on the priorities, nothing will happen and many aspiring units will come up somewhere else. If the government is serious about it, we have to get the PLI for the petrochemicals as we hardly have any incentives. To become the petrochemical hub we also have to look at the regional demand. The PCPIR was a non-starter and needs revisiting. The government has to look at infrastructure and incentives.  Logistics is the key ingredient and so is the feedstock where we need to address the cost factor," adds Sengupta.

"In my view the per capita consumption of petrochemicals is not the lowest but we have a lot of room. We are about one tenth of global consumption and there is a huge potential. However, one of the major issues is that we are import dependent. For feedstock, we depend on imports and the 50% gas we are importing too," says P. V. Balaramakrishna, GM – Technology, L&T Hydrocarbon Engineering.

“We are working on COP-26 panchamrit commitments where we are betting big on solar, wind, and green hydrogen. There is uncertainty in the transportation market which rightly so as this is where the basic decarbonization goal has to move. This essentially creates a very dynamic situation as to how the refineries have to move. The general thumb rule is that about 12% crude goes into petrochemicals but will it remain the same is our question. Going by our experience, it is not the same any longer. In the last few years, there has been an increase of up to 24% of product basket going into petrochemicals. I feel the new refineries will have to get configured to produce more petrochemicals and less on the volatile transportation market. We need to do it systematically and also try aggressively to find the alternative feedstock or at least diversify from the traditional feedstock options. I am very bullish that India can achieve that going forward," adds Balaramakrishna.

Petrochemicals have been an important part of human activity and one can't imagine a life without it. As a result, the consumption of petrochemicals has been ever-growing, says Vijayraghavan K. S., Head Sales - Global Services, Elliott Group.

“In the Indian context, the market is expected to grow from 42.50 million tonnes in 2021 to 49.62 million tonnes by 2025. From 2025 to 2035, India's petrochemical capacity is expected to stand at 87.2 million tonnes at 6.9% CAGR. Among the new projects, there will be 15 world scale petrochemicals assets by 2025. In terms of policy, the government of India is promoting innovation of new technologies locally. An investment worth US $100 billion is expected to bridge the supply deficit. The key market influencers include specialty chemicals, and plastic manufacturing. Crude oil refining capacity, growing population, improving standard of living of the masses," Vijayraghavan elaborates.

Vijayraghavan explains his company's expertise in the area: "Elliott Group is a global leader in the design, manufacture and service of technically advanced centrifugal compressors, steam turbines, power recovery expanders and axial compressors. For 50 years, we have been the world leader in centrifugal compressors for ethylene production. Elliot's experience and achievement in the ethylene industry include installations in nearly 50% of the world's nameplate Ethylene capacity. Installations in over 65% of the Ethylene plants that produce >500 KTA, and installations in over 140 Ethylene plants in more than 60 countries worldwide. The company also has installations of more than 800 compressors worldwide for ethylene service."