Indian Oil to expand Panipat naphtha cracker capacity

By Seng Li Peng

SINGAPORE (Reuters) - Indian Oil Corp plans to expand capacity at its naphtha cracker in Panipat to 1.2 million tonnes per year (tpy) by 2019, the executive director of the refiner's petrochemical division said.

The expansion would increase capacity of the cracker in northern India from about 850,000 tpy, S Mitra told Reuters on Friday during a condensate and naphtha forum in Singapore.

The expansion of the cracker - which produces petrochemicals such as ethylene and propylene, the building blocks for plastics or polymers - would cost about half a billion dollars, he said.

"Demand in (India) for polymers is growing," said Mitra, adding that about 90 percent of the polymers that IOC produces is for domestic consumption.

But it is unlikely that IOC would be building a brand new naphtha cracker in India in the short-term because of the challenges it faces in obtaining naphtha from one single refinery, he said.

The Panipat cracker currently needs over 2 million tonnes of naphtha feedstock a year and takes it naphtha from a few nearby refineries, including IOC's own Mathura and Haldia plants.

This will continue after the cracker's expansion.

IOC, India's top refiner by capacity, exports an average of 800,000 tonnes of naphtha a year through various ports including Dahej, Chennai and Haldia.

Its new 300,000 barrels-per-day (bpd) Paradip refinery will not have any surplus naphtha for sale as it is built to maximise output of gasoline at about 3.5 million tonnes a year (81,000 bpd), Mitra said.

India exports about 6 to 7 million tonnes of naphtha a year currently, said Mitra. In total it has more than 200 million tonnes of refining capacity and consumes over 160 million tonnes of oil products.

(Reporting by Seng Li Peng, editing by William Hardy)