Oct-2022

Meeting the Indian demand for petrochemicals

George Fortman
The Catalyst Group

Article Summary

This is reinforced by many factors, most notably the forecasts which predict a slowing of transportation fuels growth approaching 2040 (with hybrids and EVs), while the growth in chemicals is expected to increase as the population and middle-class wealth continue to rise, leading to increasing demand for packaging and consumer goods.

This said, nuances to the Indian market for fuels and petrochemicals need to be navigated to ensure maximum profitability and sustainability in the future. India will experience much higher growth rates in oil demand compared to the global market. India’s oil demand is forecasted to rise by 7% between 2019 and 2030 versus a global growth rate of 6.6%, according to the IEA’s Stated Policies Scenario.1 Furthermore, the mix of oil-based products is likely to change due to a relative increase in the share of gasoline versus diesel due to several factors. The main factors include the Government of India’s (GOI) removal of the diesel subsidy in 2014, the implementation of the Bharat Stage 6 (BS 6) emissions standards in 2020, the implementation of the CAFÉ II norms in April 2022, and the expected rollout of BS 6 Phase II in 2023. The result is more expensive diesel cars in tandem with more expensive diesel fuel opening the door for deeper market penetration by gasoline and gasoline vehicles.

What does all of this mean? India will have increased demand for fuels and petrochemicals, but the increase in gasoline demand will compete with the demand for petrochemical feedstocks. Technology producers are, of course, rising to the challenge. For example, KBR, in partnership with Neste Engineering Solutions, has suggested that while naphtha and reformate are being routed to petrochemical product, there is a need for high octane, low RVP components. This need can be met utilising their NexEther and NExOctane technologies by converting the butane-butylene fraction from the FCC unit to ethers and alkylates. MTBE or ETBE can be produced from etherification of isobutylene with methanol or ethanol. They also present a strategy to produce alkylate from C₄ olefins and isobutane using Exelus Inc’s ExSact solid acid catalyst. Both technologies offer a flexible option to drive towards 95 RON gasoline while utilising a largely untapped resource in refineries.

According to GlobalData’s latest report, Global Petrochemicals New-Build and Expansion Projects Outlook 2021-2025, nearly 34% of all petrochemical project starts (totalling 281 projects) in Asia will take place in India.2 The investments are due to the fact that India’s economic growth is causing demand for petrochemicals to outpace supply.3 A study conducted by Engineers India Ltd (EIL), with information provided by government-owned IndianOil Corporation Ltd (IOCL), forecasted demand for petrochemicals in India may increase between 2020 and 2040 by 222% from 40 to 87 million metric tonnes per annum.

Increases in petrochemical production can come from a multitude of intermediate streams. The Catalyst Group Resources’ (TCGR) most recently completed report, Oil-to-Chemicals II: New Approaches from Resid and VGOs, explored both ‘carbon-out’ and ‘hydrogen-in’ options for increased petrochemicals, looking at such technologies as visbreaking and Flexicoking for the former and residue hydrocracking and slurry residue hydrocracking for the latter. In TCGR’s next study, Oil-to-Chemicals III: Stepwise Capex Options for Fuels Refineries, we will explore ‘add-on’ and low Capex options to boost petrochemical production. The study will include options for increased olefins, C₄s, and C₅+s from FCC revamps and catalyst options, strategies for enhanced BTX production through naphtha reforming and aromatics operations, as well as dehydrogenation strategies for on-purpose olefins. We will couple these technology advancements with synergies for decarbonisation, as well as examine the process economics and carbon footprint evaluations. The study will give guidance in selecting the most cost-effective route to meet the aggressive growth in demand expected for petrochemicals with implications for Indian producers.

Today, we have entered an era where socioeconomic and supply/demand trends are shifting, and traditional business models of segregated refining versus chemicals production no longer hold true. Navigating the complexities of the market and choosing the right technology to enable flexibility while maintaining efficiency will be critical to the path to future success in Indian refining.

This short article appeared in the 2022 Refining India Newspaper, which you can view HERE