Mumbai: Billionaire Mukesh Ambani’s Reliance Industries Ltd may start work on a multibillion-dollar chemical plant this year, reviving a project to meet India’s surging demand for the raw materials for plastics, drugs and textiles.
Reliance is close to deciding the final configuration of the plant, which will be capable of producing as much as 1.6 million tonnes a year of chemicals such as ethylene and propylene, said a person familiar with the project, who declined to be identified because the information isn’t public.
Expansion strategy: The plant will get its feedstock from gases and other by-products produced at Reliance’s Jamnagar facility (above), the world’s largest oil refining complex. AFP
The plant will get its feedstock from gases and other byproducts produced at Reliance’s Jamnagar facility, the world’s largest oil refining complex, and will take about four years to build, the person said.
Reliance is restoring a project originally slated to start in 2011 as refiners, including Exxon Mobil Corp., Royal Dutch Shell Plc and Saudi Basic Industries Corp., add petrochemical capacity to meet demand from Asia’s fast-growing economies. Cracking margins for ethylene, which fell to about $100 (Rs4,720) a tonne in 2008, recovered to more than $400 in the first quarter.
“This will come at a good time. We are oversupplied right now but beyond 2011, there’s a sharp drop-off in terms of new capacity,” said Sriharsha Pappu, a Dubai-based analyst with HSBC Bank Middle East Ltd. “In the next three to four years, we could very easily be undersupplied.”
Manoj Warrier, a Reliance spokesman, didn’t respond to emails and phone calls requesting comment.
Ambani, Asia’s richest man, predicted last month that rising crude prices will force the petrochemical industry to become more competitive by building super-size plants that integrate oil refining and petrochemical manufacturing.
“Everyone is worried about excess capacity in our industry,” Ambani said at a conference in Mumbai on 14 May.
New projects must migrate to new petrochemical super sites and new assets must factor the shift in demand to Asia, he said.
Reliance’s board approved a proposal in February 2007 to build a $3 billion integrated cracker and petrochemicals complex at Jamnagar by 2011, according to a statement it filed to the Bombay Stock Exchange at the time.