New Delhi [India], February 14 : Indian refiners have announced significant investments in the expansion of their petrochemical capacities, aiming to reduce their carbon footprint and bolster their revenue streams.
According to S&P Global Commodity Insights (GCI), entities including BPCL, ONGC, HPCL, Reliance Industries, and Nayara Energy have committed substantial investments in petrochemical ventures, signaling a conscious effort to diversify their portfolios beyond traditional refining activities.
Pankaj Jain, India's oil secretary, said, "Indian state refiners' expansion programs would focus increasingly on boosting conversion ratios from crude to petrochemicals to about 10 per cent-15 per cent, from around 4 per cent-5 per cent currently".
Krishnakumar Gopalan, BPCL chairman said, "We are bullish about India's growing economy, and we are aggressive on building refining capacity to cater to the rising energy demand, but in a responsible manner. We will be moving largely from transportation to petrochemicals and balance capacity increase."
"Oil may have a significant presence in the world until 2050. The challenge is how we build our refineries [while] keeping the emissions reduction factor in mind," he added.
HPCL-Mittal Energy Ltd CEO Prabh Das, said, "It was considering adding new capacity to its plant at Bhatinda in northern India".
The move aims to tap into new revenue streams while mitigating the cyclicality inherent in the oil and gas industry.
The expansion aligns with India's vision of becoming a net exporter of petrochemicals, reflecting the industry's proactive approach towards sustainable growth.
Prasad Panicker, head of refineries at Nayara Energy, said, "Driven by a vision of transforming India into a net exporter of petrochemicals, we are commencing our maiden journey into the high-growth petrochemicals industry with a propylene recovery unit/polypropylene unit project at our Vadinar refinery."
Against the backdrop of climate change concerns, refining CEOs emphasized the importance of employing technologies to minimize emissions while expanding operations.
The imperative to combat climate change underscores the industry's commitment to sustainable practices, ensuring responsible growth without compromising environmental stewardship.
Sumit Ritolia, refinery economics analyst, S&P Global Commodity Insights, said, "Indian refiners were proactively embracing petrochemical ventures as part of a broader strategy to adapt to changing market dynamics, enhance competitiveness, and position themselves for sustained growth in the future in the event energy transition and electric vehicles hit demand for transport fuels".
"Investments by BPCL, ONGC, HPCL, Reliance Industries and Nayara Energy in the petrochemicals sector indicate conscious efforts to diversify portfolios beyond traditional refining activities. This diversification allows them to tap into new revenue streams and insulate themselves from the cyclicality of the oil and gas industry," he added.
Indian refiners are strategically shifting towards petrochemicals to reduce overdependence on traditional transport fuels, such as gasoline and diesel.
This shift reflects a broader strategy to adapt to changing market dynamics, enhance competitiveness, and position themselves for sustained growth amidst the ongoing energy transition and the rise of electric vehicles.
The International Energy Agency (IEA) lauded India's refining industry for its significant contributions to global markets, positioning the country as a reliable international products supplier.
Despite increased competition, India's refining capacity expansion is poised to meet robust domestic demand growth while sustaining substantial product exports.
The IEA forecasts continued growth in India's refining capacity, with significant potential for product exports.
The country's refining industry is well-positioned to maintain its reputation as a key source of light and middle distillate supplies to global markets, further solidifying its status as a reliable oil products supplier.
India's refiners are embarking on a transformative journey, embracing petrochemical ventures and sustainability initiatives to secure their position in the global energy landscape.
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