IOC may revise product mix for Paradip petrochemicals project

Indian Oil Corporation (IOC) is looking to revise the product mix for its petrochemical project at the upcoming 15-million tonne refinery in Paradip, Orissa. The refinery is being built at an investment of Rs 29,400 crore.

Under the initial plan, the company had planned to set up a 2.4-mt petrochemical project to produce paraxylene (1.2 mt), polypropylene and styrene (600,000 tonnes each). “Now we are thinking whether we should do the same three products or change it. We are also trying to see if we should do it in a piecemeal manner,” said B N Bankapur, director (refineries).

The company will make a new feasibility report, taking into account the desired changes, and decide in three to four months after that. Bankapur said polypropylene was a common product and should appear in the new product configuration. “We are also looking at an option of doing polypropylene alone, rather than having all the three products, which will delay the project. The rest of the products can follow later,” he said.

While putting up a production facility for polypropylene alone will cost between Rs 5,000-6,000 crore, having all three products together with 2.4 mt capacity will cost Rs 20,000 crore, including a power plant. Polypropylene will not require a dedicated plant and its power requirement would be met from the refinery itself. On the market for polypropylene, Bankapur said it was in surplus today but there was a potential for export. “In the next two to three years, the domestic market will have a deficit, by when we will be ready to commission the project,” he said.

IOC is aiming to clock revenues of Rs 15,000 crore from its expanding petrochemical business in 2011-12, more than double its current level of Rs 6,000 crore. It has been trying to diversify into petrochemicals from the liquid fuel business, where its margins remain under pressure, as it is required to sell products such as petroleum, diesel, kerosene and LPG at government-determined prices. The company recently launched a new petrochemical brand, ‘Propel’.