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Indian refiners have turned their focus to raising production of petrochemicals to cater for rising demand and help hedge against lower refined fuel margins, the country’s oil secretary and company officials said on Wednesday.
“We need more petrochemicals because that’s what we are importing at the moment,” Oil secretary Tarun Kapoor said at the India Energy Forum organised by IHS CERAWeek.
“Diesel demand is not likely to increase at the same pace as the requirement for petrochemicals,” Kapoor said. “We may also have to reconfigure the existing refineries so that we are able to match the requirement of the country (for petrochemicals).”
At present Indian refiners are geared up to maximise output of diesel, which makes up about two-fifths of refined fuel demand in Asia’s third-largest economy.
The country’s top refiner Indian Oil Corp aims to raise the proportion of petrochemicals from each barrel of oil it processes to 20%, from the current level of between 8% and 10%, its chairman S.M. Vaidya said at the event.
“As a long-term strategy and due to the uncertainty in the margins of the refined fuel we also intend to enhance our petrochemical integration strategy to around 14% to 15% on a corporate basis by the year 2030,” Vaidya said.
IOC recently approved projects worth $4.6 billion to enhance the capabilities in petrochemicals and speciality products of its refineries, Vaidya added.
India’s per-capita consumption of petrochemicals is about a tenth of the global average, providing scope for growth.
Nayara Energy, part-owned by Russian oil major Rosneft, sees a substantial integration between refinery and petrochemical operations, said Chief Executive B. Anand. He said petrochemicals were not just margin boosters but also provided a “margin buffer”.