Taiwan $6.6 bn petrochem plan IOCL feedstock constraints - Arhive

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Taiwan’s $6.6 bn petrochem plan hits IOCL’s feedstock constraints   Taiwan $6.6 bn petrochem plan IOCL feedstock constraints

Development puts a spanner in Odisha’s efforts to draw investments in downstream space for the Petroleum, Chemicals & Petrochemicals Investment Region (PCPIR) hub around Paradip  Taiwan $6.6 bn petrochem plan IOCL feedstock constraints

Nirmalya Behera & Jayajit Dash  |  Bhubaneswar

Taiwan $6.6 bn petrochem plan IOCL feedstock constraints

Photo: Reuters

INDIAN OIL CORPORATION LTD

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A massive investment plan of $6.6 billion (or Rs 430 billion) by Taiwan’s state-owned petroleum & natural gas company, CPC Corporation, in the country’s eastern coast at Paradip has bumped into a hurdle at the stage of project conception.

Paradip has emerged as a suitable location for CPC Corporation’s greenfield cracker plant and downstream petrochemical units.Taiwan $6.6 bn petrochem plan IOCL feedstock constraints

Last week, a delegation from the led by Lee Shun-Chin, president of visited the site of Indian Oil Corporation Ltd’s (IOCL’s) 15 million tonne crude oil refinery at Paradip.

Before the site visit, the delegation had negotiations with Dharmendra Pradhan, Union minister for petroleum & natural gas.Taiwan $6.6 bn petrochem plan IOCL feedstock constraints

The successful operations of the projects proposed by are contingent on a consistent supply of feedstock by the IOCL refinery unit.

IOCL, though open to establishment of new petrochemical units around its refinery plans, is constrained to supply raw materials to the interested units. “IOCL has genuine feedstock constraints.Taiwan $6.6 bn petrochem plan IOCL feedstock constraints

The oil company is not in a position to firm up commitments for the downstream units,” said a source familiar with the development.Taiwan $6.6 bn petrochem plan IOCL feedstock constraints

IOCL did not respond to Business Standard’s email questionnaire till the time of filing of this report.

In fact, IOCL’s constraints to supply ethylene have put a spanner in Odisha’s efforts to draw investments in downstream space for the Petroleum, Chemicals & Investment Region (PCPIR) hub around Paradip. Strikingly, the oil monolith is the anchor tenant for the hub.Taiwan $6.6 bn petrochem plan IOCL feedstock constraints

The potential polymer based units at the PCPIR hub were looking at a steady supply of ethylene from the IOCL refinery installed at Paradip.

IOCL, however, has plans to use ethylene as a feed to set up a mono ethylene glycol plant as part of its petrochemical complex.Taiwan $6.6 bn petrochem plan IOCL feedstock constraints

In this backdrop, the oil marketing company is not in a position to spare ethylene for the downstream units as the entire quantity is expected to be consumed in the value addition process.Taiwan $6.6 bn petrochem plan IOCL feedstock constraints

IOCL chairman had dashed a letter to Odisha’s chief secretary in June last year, citing the company’s constraints to supply ethylene.Taiwan $6.6 bn petrochem plan IOCL feedstock constraints

“None of the refineries in India is trading large commercial quantities of ethylene today. Also, we have not been approached by any party for ethylene,” Singh wrote then.

IOCL has suggested that the interested (polyvinyl chloride) units could explore the alternative process of producing ethylene from natural gas with the availability of natural gas around Paradip in the future.Taiwan $6.6 bn petrochem plan IOCL feedstock constraints

As the anchor tenant of the PCPIR, IOCL has sunk in Rs 350 billion on a 15 million tonne crude oil refinery.Taiwan $6.6 bn petrochem plan IOCL feedstock constraints

The refinery is positioned to offer feedstock to downstream industries in chemicals and  Taiwan $6.6 bn petrochem plan IOCL feedstock constraints

The oil major had pledged to invest Rs 517.79 billion more to commission various units of its planned petrochemical complex.Taiwan $6.6 bn petrochem plan IOCL feedstock constraints

But, the company’s establishment of petrochemical units have been impeded by lack of land allotment by the Odisha government.Taiwan $6.6 bn petrochem plan IOCL feedstock constraints

IOCL, in February last year, had asked for 2290 acres of additional land to commission the petrochemical units. The oil major preferred to have land contiguous to its 15 million tonne per annum crude oil refinery at Paradip. A decision of leasing land to the company is still pending with the state government.Taiwan $6.6 bn petrochem plan IOCL feedstock constraints

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