Indian Oil plans foray into petrochemical production in US

In order to take advantage of shale gas & oil boom in the US, Indian Oil Corporation Ltd (IOCL) is reportedly looking at entering petrochemical manufacturing in that country. “The company is interested in downstream petrochemical plant in the US and is holding exploratory talks with companies who are in process of setting up crackers or petrochemical units,” said an IOCL official in Mumbai without disclosing the size of the investment. IOCL is keen on having a stake in an upcoming project, which is still in the planning or is yet to reach financial closure stage.
 
The finalisation of the deal is still a long way and will mostly fructify only after the 2016 presidential election in the US, where gas exports policy has divided the industry. While energy companies want no control on the exports of shale gas, the chemical & petrochemicals companies (which can use gas to make petrochemical products) have urged the government to put some curb on the exports.
 
Indian Oil already has a presence in the US shale market through its 10 percent stake in Carrizo’s liquid rich shale assets in the Niobrara basin in Colorado.
 
IOCL’s plan (to set up a petrochemical plant) will signify a major shift in the Indian hydrocarbon sector, where most of the companies have been scouting for procuring low-cost shale gas from the US rather than setting up downstream unit in the US. If IOCL finalises its US petrochemical unit plans, it will join a list of overseas companies who have announced huge investments in downstream petrochemical industry in the US due to the availability of low-cost feedstock (or starting material) ie shale oil & gas.
 
Riding on the shale boom wave, some of the leading global companies (especially in the Europe) are looking to procure ethane (a key raw material to make polyethylene), which is available in surplus in the US. Even, India’s Reliance Industries plans to ship 1.5 million tonnes per annum of ethane from its US shale joint ventures to its chemical complex in Gujarat.