IOC plans Rs 25000 cr petrochem thrust

Indian Oil Corporation (IOC) has planned a mega foray in petrochemicals with an estimated investment of Rs 25,000 crore.

The company intends to utilise the streams available from its various refineries for forward integration. The concentration would, however, be on Panipat refinery in the north and the proposed Paradip refinery in the east.

"The basic idea is to consolidate our position in the north and east before taking on established players in the sector. We want to be a major player in the petrochemicals," an IOC official said.

The entire investment would be phased over eight years. In fact, IOC is spending Rs 10,852 crore in petrochemicals alone between 2002 and 2007, which is about 45 per cent of the investment of Rs 24,399 crore planned during this period.

Reliance, along with IPCL, holds over 60 per cent share of the market, followed by Haldia Petrochemicals Ltd (HPL) and GAIL India. IOC first intends to make stronghold in the north and east before taking Reliance head on in the west where RIL and IPCL are located.

Moreover, Panipat and Paradip will be two newest refineries for the company and concentration of petrochemical facilities would make sense. In the southern market, IOC may use subsidiary Chennai Petroleum Corporation for its petrochem foray.

IOC, however, has to compete with GAIL's unit located in Uttar Pradesh, and HPL in West Bengal, for supremacy in those markets.

The Paradip refinery and integrated petrochemical complex will be completed by 2007-8. In Panipat, IOC is setting up a paraxylene and purified terephthalic acid (PX/PTA) plant at a cost of Rs 5,150 crore which will be completed in 2005. Moreover, it is setting up a naphtha cracker and downstream polymer units at a cost of Rs 6,300 crore to be completed by 2007.

In Paradip, the company intends to set up a petrochemical complex which is likely to include olefins as well as aromatic units for production of polymers, paraxylene and styrene among others.

In addition, other products of about of Rs 3,500 crore investment have also been identified. They are standalone polypropylene units based FCC revamps, acrylic acid/acrylates based on propylene and engineering polymers like acrylonitrile butadiene styrene.

The first of the IOC stable in petrochemical business is, however, going to be the linear alkyl benzene facility at Koyali refinery. It is going start production soon.