The Indian petrochemical sector is poised for robust growth, but the journey requires navigating a complex landscape of opportunities and challenges. Strategic investments, underpinned by innovation and sustainability, will be key to unlocking the sector’s full potential. 

In this context, the leading experts from the petrochemical industry shared the latest trends at the third session of the second edition of PetroChem Summit 2024 titled ‘Investment: Opportunities and Challenges’ organized by the Indian Chemical News in New Delhi on December 18, 2024. 

The session was moderated by Ankur Singh, Vice President  & Head, Strategy – Chemicals Division, DCM Shriram Limited. Sharing  an overview of the global trends, Singh informed, “The chemical sector in India is doing good but going forward the way world dynamics are changing, the US has already got an energy positive ecosystem and China is playing differently as the country is attracting investment despite the local issues. The latter is operating on a mini cracker ecosystem where they want to decrease their dependence on the US energy circle. The Middle East, knowing the limited future for the traditional oil feed stock, is going into the oil to chemicals (O2C) ecosystem aggressively. Suddenly the whole petrochemical ecosystem has changed as there is rise of electricity mobility and green energy in the European ecosystem. It would be interesting to see how the future of the global value chain will shape up and since it has become a regional play, India's role in profitability and cost curve, especially when it has been traditionally disadvantaged with feedstocks." 

Sharing his global perspective on untapped opportunities in petrochemicals, Manas Majumdar, Partner - Energy & Chemicals, PwC said, “Petrochemicals is and will continue to be a growth industry but there are challenges. Global petrochemical industry is almost north of US$ 1100 billion (3 trillion) and of course China dominates it both as a consumer and producer of petrochemicals. India too has US$ 180 billion worth market with 30-35% petrochemicals being imported for consumption. Globally, Europe has shrunk as a consumer market and the Middle East continues to lead in oil production and will diversify into petrochemicals. Equivalent to that is the US market which has both a producing and consuming market. It has the benefit of having both naphtha and steam crackers. A large player BASF is looking at setting up a production plant in China. There is a secular growth in petrochemicals irrespective of a few pockets of disturbance. Overall, there is a secular growth in petrochemicals in India and the country remains a bright spot, witnessing about 9% consumption led growth.” 

“There is an overhang of specialty as the market is lucrative due to growing demand as compared to petrochemicals. The technology is well known and is essentially cost competitive. There is a huge capacity building coming up. Indian Oil is expanding in its Paradip complex with the US$ 7 billion (Rs 65,000 crore) investment that has been signed off by its Board. PSUs such as IOC are looking at expansion and so is GAIL at its Vijaypur facility. BPCL as a part of its Bina expansion is also looking at it. The growth is mostly PSU led except Reliance Industries. While most of the petrochemical is naphtha based, Reliance is looking at off gas and investing into vinyl. Adani may also look at it in the longer run. Overall, the investment sentiment is cautious. There is aptitude but there is timing factor and other challenges. The time taken between announcement and commissioning of the projects is long,” added Majumdar. 

Providing a policy perspective, Keshav Shrivastava, Mid-Level Consultant - Investment Promotion, Department of Chemicals & Petrochemicals, Ministry of Chemicals and Fertilizers, Govt. of India said, “In terms of policy, we have a muti-ministerial approach in the petrochemical industry. We have the Ministry of Petroleum and Natural Gas which is ensuring the feedstock for the petrochemical industry and we have the Ministry of Chemicals and Fertilizers to ensure the supply chain for petrochemicals. We also have PCPIR policies for developing the petrochemical infrastructure in the country. In terms of downstream processing, we have the Ministry of Textiles that is helping with textile parks and other initiatives. In terms of a clean economy, we are moving towards clean fuel consumption which is also pushing the government in the whole ecosystem. This is where the government approach lies in promoting this sector.” 

“We have plans in place such as 310 MMT of petrochemical feed-stock by 2030. These plans are a way of pushing the cost reduction. In terms of ensuring a policy framework for feedstock and value addition, we have seen downstream investment. In Dahej, we have seen the downstream investments. 100% FDI in the chemicals and petrochemicals. We have seen the World Competitive Index where we have achieved 40th rank from 83rd rank in 2015.We are working on supply chain for cost competitiveness. We are looking for various forums such as the Indo-Pacific Economic Forum for finding viable solutions. Internally, we are developing the capacities through PSU and also ensuring that there is no crunch in our future plans and policies. PM GATI Shakti promises to reduce the logistics cost in the photochemical movement. We are trying to map the major infrastructure projects and help reduce the costs,” added Shrivastava. 

Highly optimistic about the future growth potential of Indian petrochemical sector, Sanjay Kumar Papneja, Chief General Manager - Petrochemical Projects, IOCL said, “India has a strong dearth of petrochemical products and we imported 10 MMT of petrochemicals post corona period. With rapid urbanization and rising income levels, we could see the import to 40 MMT if not supplemented by additional production in India. The availability of feed-stock is met in India. Energy sector is under transition. Ethanol blending is under progress and the EV and hybrid has reached to 50% levels in China. India is at the initiation levels but eventually the share of fossil fuel in transport will go down. Be it PSU or private sector, we are preparing for it as the demand is going to increase. Therefore, there will be an increase in 10-12 MMT capacity in 5-6 years. We have done too much on commodities but now specialty chemicals need to be focused upon.” 

"More than 80-85% product comes from C2-C3 value chain which is majorly derived from crackers. There are other technologies available as well but a cracker plays a critical role as it is the heart of the industry. There is no difference between China and India in terms of import of feed-stock. Europe is a similar case. Only the US and Middle East are different as they have ample feed-stock. India has the disadvantage that it imports the feed stock but it also has a huge demand centre and good geography for consumption. That can be witnessed through how good existing crackers are doing. In terms of cost competitiveness, how 70-75% of Indian capacities are with the integrated set up. Integration leads to cost efficiency and operational efficiency. Dahej is one example where integration is happening," added Papneja.

The PetroChem Summit 2024 themed ‘Identifying New Opportunities For Value Creation’ was supported by the industry associations including Alkali Manufacturers Association Of India (AMAI) and Chemicals & Petrochemicals Manufacturers' Association (CPMA). The Platinum Sponsor was Somaiya Vidyavihar University and Gold Sponsor, Tubacex Group.