petrochemicals pdf
TRANSCRIPT
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INDIAN PETROCHEMICAL INDUSTRY –CHALLENGES AND OPPORTUNITIES
9th International ConferenceIndian Petrochem - 2007
MumbaiNovember 19-20, 2007
Presented ByA K Purwaha, Director (Business Development)
GAIL (India) Limited
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PRESENTATION OUTLINE
• Petrochemical Scenario
• India Outlook
• Challenges
• Enablers
• Conclusion
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Petrochemical Scenario
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WORLD ETHYLENE CAPACITY
THE GLOBAL PETROCHEMICAL INDUSTRY IS SET TO UNDERGO A STRUCTURAL CHANGE –THE BALANCE OF POWER IS EXPECTED TO SHIFT FROM WEST (NORTH AMERICA & WESTERN EUROPE) TO EAST (ME & CHINA)
Source : Oil & Gas Journal July 2007 (as on Jan 1, 2007)
0.20Brazil
1.90Thailand
1.00Taiwan
0.80Singapore
0.57Trinidad & Tobago
1.05Venezuela
0.34Germany
0.850Oman
6.308Saudi Arabia
1.50UAE
3.80Qatar
36.236
0.85
8.438
2.12
6.23
0.56
Total
Kuwait
Iran
India
China
Belgium
Ethylene Expansions, 2007-11
31.6
8.524.4
12.4
5.0
35.7
India Current - 2.5 MMTPA (2%) Future - 4.62 MMTPA (3%)
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PETROCHEMICALS – GLOBAL SCENARIO
827722ETHYLENE OXIDE
26381929PARA XYLENE
17331330STYRENE
PROPYLENE
ETHYLENE
Product
82
127
Global
Capacity Projection
2007
4310134
5216339
AsiaGlobalAsia
Demand Projection
2015
(MMTPA)
Source: Nexant
WIDE APPLICATION WITH NEW USAGE HAS ACCELERATED DEMAND
2525SBR
1214DMT
1826720MEG
PSPPPVCHDPELDPELLDPE
Product
154940352121
Global
Capacity 2007
7158336921224621194711923614326
AsiaGlobalAsia
Demand Projection 2015
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EXISTING PLANTS AND FUTURE EXPANSION – PETROCHEMICAL COMPLEXES IN INDIA
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Haldia
NagothaneThane
Hazira
BarodaGandhar
Pata
PETROCHEMICAL CAPACITY - INDIA
1770
310550910
-
60
160
450
-
240
HDPE-LLDPE
205
--
205-
-
-
-
95
110
LDPE
750NaphthaRIL / Jamnagar / Gujarat
1400Sub Total RIL
Gas
Naphtha
Naphtha
Gas
Naphtha
Naphtha
Gas
Feed Stock
1700TOTAL
-GAIL / Pata / UP
300HPL / Haldia / WB
-
RIL (Nocil)/Thane/ Maharashtra
-RIL (IPCL)/ Gandhar/ Gujarat
400RIL / Hazira / Gujarat
150RIL (IPCL) / Baroda/Gujarat
100
RIL (IPCL) / Nagothane /Maharashtra
PPCompany/Location
(KT/YR)
Indian Petrochem Market is dominated by RIL. HPL and GAIL are the other major players
Petrochemical Complex
Jamnagar
Source: Industry Estimate
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Substantial Capacity Enhancement in India in next 5 – 8 years
PETROCHEMICAL CAPACITY ADDITION IN INDIA
-(Also SBR-140)
3401020ONGC, Dahej
2010-11-600RIL
2009-10600650IOCL, Panipat
2008-0915080HPL, Haldia
2011-12350-HPCL, Bhatinda
2011-12 (Also PX – 1067Styrene – 469)
650-IOCL, Paradeep
2011-12
2007-08
2010-11
Expected Timeline
60220GAIL, Assam
2670
100
-
PE
3050Total
-GAIL, Pata
900RIL, Jamnagar
PP
(KT/YR)
GAIL, Pata
HPL, Haldia
RIL, Jamnagar
ONGC, Dahej
HPCL, BhatindaGAIL, Assam
IOCL, Paradeep
Source: Industry Estimate
Proposed Capacity Augmentation / New complex
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INDIAN DEMAND PROJECTION & CAPACITY FOR PE AND PP
FUTURE CAPACITIES TO LOOK FOR EXPORT ALONG WITH DOMESTIC SALES – CHINA ALONE IS PROJECTED TO IMPORT ABOUT
7.7 MMT OF PE AND ABOUT 3.7 MMT OF PP IN 2012
Capacity Build-Up by 2012-13
(KT)#
Demand Projection by 2011-12* (KT)Projected* Demand in
2006-07(KT)
Product
LLD /HD
47503443462726341712DEMAND-15%22%9%-CAGR
PP44403379436725791755DEMAND
-14%20%8%-CAGR
205313344285234DEMAND
-6%8%4%-CAGR
AverageOption IIOption ILDPE
*Source : 11th Five Year Plan
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INDIAN DEMAND SCENARIO FOR OTHER PRODUCTS
ONGC’S DAHEJ COMPLEX WILL HAVE 140 KT SBR, IOC’S PANIPAT COMPLEX WILL HAVE 300 KTA MEG AND IOC’S PARADEEP COMPLEX
HAS PLAN TO HAVE 1067 KT PARAXYLENE AND 469 KT STYRENE
*Source : 11th Five Year Plan
-40182438Synthetic Fibres-38792661PTA / DMT-1499920MEG-25602180Para Xylene-14989PBR
-255121EVA-12980SBR
481351241Polystyrene 277220311320PVC
Option IIOption I
Demand Projection by 2011-12* (KT)Demand in 2006-07Product
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India Outlook
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Source: EIU Report, Oct 2007
239.36
41.49
5.9
7.2
4302
1110.48.0
2007 Est.
289.07136.03102.26International Reserves (US$ billion)
39.044.1046.58Exchange Rate Rs:US$ (Av)
5.04.23.8Consumer Price (end-period, %)
6.48.18.4Recorded unemployment (Av; %)
512835382936GDP per head (US$ at PPP)
1140.21080.31049.7Population (million)7.59.28.4Real GDP Growth Rate (%)
2009 Est.
2005 Actual
2003 Actual
Parameters
INDIAN ECONOMY – THE JOURNEY SO FARAND THE ROAD AHEAD
INDIAN ECONOMY IS UNDER FAST TRACK GROWTH WITH INCREASING HOUSEHOLD INCOME,
INCREASING EMPLOYMENT RATE, STEADY ECONOMY AND GROWING FOREX RESERVE
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Per capita polymer usage is growing across various regional markets, driven by following drivers :
– Growing active population – Young India: Assured workforce for next 50 years
– Strong emergence of middle class and increase in consumption expenditure
– Growing urbanisation
– Product introduction and substitution
– Investment in infrastructure
POLYMERS-GROWTH DRIVERS
0
5
10
15
20
India China World
Elastomers Surfactants Syn. Fibers Plastic
GROWTH RATE IN INDIA (12.7%) FOR POLYMER CONSUMPTION HIGHER THAN CHINA (11.7%)
Source: Dept of Chemicals & Petrochemicals, GOI
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62
452
20
25
14 128
156
31
56
4526
Power Road & Railways Ports & AirportsTelecom Irrigation Water supply
(in Billion US$)
GOVERNMENT’S EXPENDITURE IN 11TH PLAN TO GROW BY 163% -MAJOR INCREASE IN EXPENDITURE ACROSS ALL SECTORS
10th 5-year plan(US$ 168 Billion)
11th 5-year plan(US$ 442 Billion)
EXPENDITURE IN INFRASTRUCTURE BY GOVERNMENT
Source: Planning Commission, GoI
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Petrochemicals contribute over 20% of total chemical sector outputPetrochemicals annual consumption growth > 10%Polymer (63%) & synthetic fiber (29%) are major PetrochemicalsPolymer growth rate more than 2 times GDP growth rate in past five years
INDIAN PETROCHEMICAL INDUSTRYINDIAN PETROCHEMICAL INDUSTRY
Source: Department of Chemicals & Petrochemicals, GOI
High Growth observed in the Polymers end-use segments in past 5 years
Consumer ElectronicsConsumer DurablesAutomobilesConstructionInfrastructurePackaging
POLYMER USAGE IS INCREASINGLY FINDING NEW APPLICATIONS -GROWTH DRIVEN BY END USE SECTORS
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CHALLENGES
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CHALLENGES CHALLENGES –– INDIAN PETROCHEMICAL INDIAN PETROCHEMICAL INDUSTRYINDUSTRY
High market demand in domestic market with development of downstream processing industries for export to enable large scale investment, employment generation and margin on processing.
Infrastructure with close proximity to major port facility, Excellent logistics in transportation, tank terminal, container etc and support services like specialized utilities
Feed stock security to compete with low cost producers and maintain profitability during down cycle - Major differentiator as it accounts for 60-75% in Ethylene production cost depending on procurement source & price - Currently Advantaged In The Middle East
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FEEDSTOCKS:
Crude Oil Based Raw Materials (i.e. Naphtha) – available from refinery –India is net exporter of Naphtha – More naphtha expected from de-bottlenecking / upgradation of exiting refinery projects and new green field complexes - Possibility of setting up refinery linked complex for additional availability.
Large volume of gas reserve in country – Major Govt. initiatives in place through New Exploration Licensing Policy (NELP) for discovery and monetization; it could be a major feedstock booster for petrochemical industry
ENABLERS - INDIAN PETROCHEMICALINDUSTRY
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ENABLERS - INDIAN PETROCHEMICALINDUSTRY
INDUSTRY SPECIFIC:
Economies of Scale through creation of Mega Complexes -Integrated complex for refinery and petrochemicals
Low cost brown field expansion or de-bottling
Higher Plant Operating Rate – This reduces fixed cost per unit of production and compensate high interest and depreciation cost of such capital intensive projects
Participation of world majors in Indian petrochemical business – bring technology of new generation and marketing ease.
R&D set up for development, innovation and differentiation- testing and technology adoption of new products
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GOVERNMENT POLICY SUPPORT:
Creation of Mega Integrated Complexes – Petroleum, Chemical & Petrochemical Investment Regions (PCPIR)
Promotion of Dedicated Polyparks & Clusters for processing industries
Creation of SEZ for Exports promotion
ENABLERS - INDIAN PETROCHEMICALINDUSTRY
GOVERNMENT OF INDIA HAS RECENTLY LAUNCHED A NATIONAL PETROCHEMICAL POLICY TO BOOST INVESTMENT IN THE SECTOR, INCREASE USAGE OF PETROCHEMICALS IN THRUST AREAS, ADD VALUE IN DOWNSTREAM PROCESSING INDUSTRY AND PROMOTE R&D IN THE FIELD AND EMPHASISE HR DEVELOPMENT.
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PCPIR- POLICY FRAMEWORK
NEED FOR PCPIR
• Provide state of the art infrastructure in specific locations to boost manufacturing, augment exports and generate employment.
• Provide a sustained, transparent, consistent and investment friendly policy and facilitation regime that would encourage production for both domestic and world market.
• Memorandum of Agreement with State Govt. on respective commitments with timelines of both Centre & State
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LIKELY PCPIR LOCATIONS
• Dahej in Gujarat, Mangalore in Karnataka, Visakhapatnam in Andhra Pradesh and Haldia in West Bengal and Paradeep in Orissa have been identified.
• Each P.C.P.I.R.;– Specially delineated
investment region. – Investment of US$ 2.2 bln.– Spread over area of ~ 250
sq. km– Infrastructure through PPP
(Public-Private Partnership)
Dahej
MASSIVE OPPORTUNITIES FOR INVESTMENT
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SPECIAL ECONOMIC ZONE
A specifically delineated duty free enclave deemed to be a foreign territory for the purposes of trade operations, duties and tariffs and introduced for Promotion of export-led growth of the economy supported by integrated infrastructure and package of incentives to attract investment, bringing about increase in employment opportunities, technical knowledge and future tax revenues in return for significant tax concessions offered during start up.
Exemption from central and state Government duties & levies (customs, stamp duty, sales tax, capital gains tax etc) to SEZ developer and Units in SEZ.
Both foreign and domestic investment up to 100% permitted.
COMPREHENSIVE LEGISLATION ON SEZ INTRODUCED BY GOVERNMENT THROUGH SEZ ACT, 2005 AND SEZ RULES, 2006
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HIGH GROWTH END USE SECTORS –DOWNSTREAM MARKET
9.4985628Injection Molding10.0439273Blow Molding10.011069Roto Molding11.4277161Pipe12.81570860Woven Sacks13.123331269Film & Sheet14.711759Fibre & Filament
CAGR ( 2006-11)
(%)
Demand Projection 2011
(KTA)
Market Size 2006(KTA)
Sector
11 FIVE YEAR PLAN ESTIMATES AN ADDITIONAL INVESTMENT OF USD 6 BILLION IN PROCESSING SECTOR - INDIA CAN BE THE LARGEST POLYMER PROCESSING HUB & COMPETITIVE GLOBAL EXPORT BASE BY 2012
Source: Industry Estimate
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CONCLUSION
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Largest democracy – political stability
& consensus on reforms
Liberal & transparent investment
policies
High GDP growth & India is global 4th in PPP – Economy to
support consumption
Strong entrepreneurship,
technical/managerial skills / cost leadership
Retail boom – Changing lifestyle, Future auto hub,
Home appliances becoming necessity, growth in
infrastructure – strong market place
Logistic advantage to sell into Asia
pacific, European Union, Africa, US
east coast
SUMMING UP - ADVANTAGES INDIA
Central and state governments are
supportive to industry
POTENTIAL TO BECOME GLOBAL QUALITY LEADER AND LOW COST MANUFACTURING HUB
Well developed downstream industry with
opportunities for future investments
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THANK YOU