HMEL’s brownfield expansion to increase India’s ethylene capacity by over 10% in FY2023-24

India’s ethylene capacity is expected to increase by 10.5 percent in the financial year (FY) 2023-24, owing to a substantial capacity expansion undertaken by HPCL-Mittal Energy Ltd (HMEL). With petrochemical producers undertaking limited expansion, India’s installed ethylene capacity is poised to stagnate thereafter.

The apex industry body, the Chemicals & Petrochemicals Manufacturers Association of India (CPMA), in its latest assessment report titled ‘Indian Petrochemical Industry,’ estimates India’s total ethylene capacity at 8.677 million tonnes per annum (MTPA) in FY2023-24 (ending March 2024), a rise from 78.53 MTPA reported in the previous year. However, the ethylene capacity in India is projected to stabilize at 8.677 MTPA thereafter due to the lack of fresh investments in either brownfield or greenfield projects.

With demand rising sustainably, capacity utilization would continue to increase, albeit at a slow pace. According to the CPMA report, ethylene capacity utilization in India is set to end FY2023-24 at 88 percent, a decline from over 93 percent in the previous year. At this rate, the country’s cumulative ethylene production is estimated at 75.95 million tonnes in FY2023-24, compared to 73.12 MTPA in the previous year. Total ethylene production in India may rise to 77.61 million tonnes in FY24-25. With an estimated 31,000 tonnes of imports against exports of 70,000 tonnes, India would ramp up dispatches to overseas clients from 35,000 tonnes in the previous year. Simultaneously, total ethylene imports into the country are estimated at 56,000 tonnes in FY2022-23.

India’s ethylene net availability (‘000 tonnes)
Particulars	2020-21	2021-22	2022-23	2023-24*	2024-25*
Capacity	7477	7477	7853	8677	8677
Production	7158	7311	7312	7595	7761
Imports	50	59	56	31	60
Exports	134	118	35	70	120
Net availability	7074	7253	7333	7557	7701

Sources: Chemicals & Petrochemicals Manufacturers Association of India, and Polymerupdate Research; *Estimates

CPMA further estimates India’s propylene capacity to rise to 76.02 MTPA in FY2023-24, a substantial increase from 70.71 MTPA and 66.14 MTPA during FY2022-23 and FY2021-22, respectively. The premier industry body projects the country’s propylene production at 57.35 million tonnes in FY2023-24, compared to 59.08 million tonnes in the previous year. India’s propylene imports and exports are likely to remain ‘nil’ in FY2023-24, as against a modest 15,000 tonnes of imports and ‘zero’ exports in the previous year.

HMEL expansion
Formed in 2007 as a public-private partnership (PPP) joint venture between the government-owned Hindustan Petroleum Corporation Ltd (HPCL) and Singapore-based Mittal Energy Investment Pte Ltd (MEIL), a company owned by the Indian billionaire Lakshmi N Mittal, HMEL’s production assets represent the single largest investment in any sector in Punjab, India. HMEL has established its name with its superior petroleum and petrochemical products and is a value-driven organization, benchmarking itself against the global best to deliver consistent excellence to fuel India’s growth story.

Known as HMEL’s Guru Gobind Singh Refinery at Bhathinda, Punjab, this project is strategically positioned to respond to India’s ever-changing energy needs. The 11.3 MTPA energy-efficient, environment-friendly, high distillate yielding HMEL complex refinery has been designed to produce high value-added petroleum products catering to a demand-driven market. The company’s wholly-owned subsidiary, HPCL-Mittal Pipelines Ltd, owns and operates the crude oil storage and transportation assets. These include a single-point mooring (SPM) to receive crude oil, a 1.02 million kilolitre crude oil terminal (COT) to store and blend crude and a 1,017-kilometre cross-country pipeline to transport the crude from Mundra, Gujarat to Bhatinda, Punjab.

India’s propylene net availability (‘000 tonnes)
Particulars	2020-21	2021-22	2022-23	2023-24*	2024-25*
Capacity	6614	6614	7071	7602	7602
Production	5621	5835	5908	5735	5923
Imports	10	27	15	0	0
Exports	15	0	0	0	0
Net availability	5615	5862	5923	5735	5923

Sources: Chemicals & Petrochemicals Manufacturers Association of India, and Polymerupdate Research; *Estimates

Responding to India’s ever-growing local demand and reducing dependence on imports, HMEL has embarked on a substantial US$3 billion expansion in the field of petrochemicals. Responsible for undertaking capacity expansions across polyethylene (PP) and polypropylene (PP) sectors, HMEL’s new project is set to come on stream soon and supplement the existing PP unit. The new project would be fully integrated with the refinery and feature a world-class Dual Feed Cracker Unit of 1.2 MTPA of PE and 0.5 MTPA of PP capacity to cater to all major application segments. HMEL has partnered with world-class licensors with pioneering technologies for the project, positioning the company as one of the formidable players of PE and PP in India.

BPCL and HPCL petrochemical projects
The government-owned Bharat Petroleum Corporation Ltd (BPCL) decided, in February 2022, to discontinue its planned specialty polyols petrochemicals project in Kochi due to cost overruns and is instead looking at building a PP plant at the site. The proposed polyols project was supposed to have a 250,000 tonnes per annum (TPA) polyols plant, a 100,000 TPA propylene glycol (PG) unit, a 300,000 TPA propylene oxide (PO) line, and a 140,000 TPA mono ethylene glycol (MEG) plant. Feasibility studies and other pre-project activities are in progress to establish an ethylene cracker project at Bina Refinery in Madhya Pradesh and a polypropylene project at Kochi Refinery in Kerala. The planned PP plant at the site would use up 250,000 TPA of propylene, which was initially earmarked for the polyols project. The company produces 500,000 TPA of propylene at its Kochi refinery, half of which goes into various downstream operations at the site.

These projects are likely to take around four years for completion once the environmental clearance is received and are expected to come on stream by 2026. In January 2022, BPCL set up a super-absorbent polymer (SAP) technology demonstration plant of 200 TPA at the Kochi Refinery. Using in-house acrylic acid as feedstock, SAP technology is used in various hygiene products such as diapers and other incontinence products. BPCL’s Kochi refinery dispatched the first indigenous super-absorbent polymer from its Propylene Derivatives Petrochemical Complex in July 2022. SAP is made using the in-house acrylic acid produced at the Kochi Refinery.

Another public-sector company, Hindustan Petroleum Corporation Ltd (HPCL), has postponed its target of raising its existing capacity of 8.3 MTPA at its Vizag refinery to 15 MTPA by December 2022. In 2020, the refiner had set the target for capacity expansion by 2023-24. Assam-based Numaligarh Refinery Ltd (NRL) has achieved financial closure for its upcoming 6 MTPA refinery expansion project. Numaligarh has finalized more details of the new diesel hydro-treating unit it will be installing as part of its multi-year expansion.

Ratnagiri and IOCL refineries
The Ratnagiri Refinery & Petrochemicals Ltd (RRPCL) has experienced a cost increase in India by 36 percent, reaching US$60 billion. The company had previously described this complex as capable of processing 1.2 million barrels per day (bpd) of Euro-VI fuels and aviation fuels, with an eventual petrochemical component comprising over 50 units. The original location for the refinery was Nanar in Maharashtra’s Ratnagiri district, but this was scrapped in March 2019 following protests by locals. The Ministry of Environment, Forest and Climate Change provided environmental clearance for the Ratnagiri oil refinery in March 2018.

Indian Oil Corporation Ltd (IOCL) has awarded an engineering, procurement, construction, and commissioning (EPCC) contract to Paris-based Technip for its expansion project at the Barauni refinery in Bihar. The contract involves the installation of a 1 MTPA ‘once-through’ hydrocracker unit (OHCU), a fuel gas treatment unit (FGTU), and associated facilities. The expansion project will increase its capacity by 50 percent to 180,000 bpd and add petrochemicals such as polypropylene to the product portfolio. The project envisages capacity expansion of Barauni refinery capacity from the current 6 MTPA to 9 MTPA. It is also proposed to implement a polypropylene unit of 200,000 TPA capacity for processing propylene feedstock.

Nayara, which operates a 20 MTPA oil refinery at Vadinar in Gujarat, has adopted a phase-wise asset development strategy to enter the petrochemicals sector. Under Phase-1 of the project, Nayara is setting up a 450,000 TPA polypropylene plant at this refinery – a propylene recovery unit along with upgrades to the existing FCC Unit (Fluidized Catalytic Cracking Unit) and a polypropylene unit (PPU). The company laid the foundation stone for its petrochemical project for a 450,000 TPA polypropylene plant in November 2021. According to the company, the Phase-1 project development has achieved over 85 percent progress and expects the production of its first petrochemical product.

As per the project proposal, GAIL plans to use around 50,000 TPA of polymer-grade propylene produced at the Pata plant as the key feedstock for the new PP unit. Currently, GAIL is selling the propylene produced at its Pata complex to several clients. In addition, the Pata complex can produce 810,000 TPA of polyethylene and 20,000 TPA of Butene.


DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com