IndianOil, BP in pact to set up 1 mt acetic acid plant
New Delhi   24-Nov-2011

BP and IndianOil are planning to set up a 50:50 joint venture acetic acid plant in Gujarat.

The two companies entered a memorandum of understanding to invest in a one-million-tonne a year acetic acid plant with associated gasification facilities for production of synthesis gas.

Acetic acid is used in petrochemicals and paints, apart from other products.

A joint feasibility study is currently under way to confirm the exact configuration of the project, which is expected to be commissioned in 2015, separate statements issued by the two companies said.

The proposed plant would employ BP's latest Cativa XL technology, whilst the gasification facilities would utilise petroleum coke feedstock from IndianOil.

On whether BP-Reliance Industries agreement will have any impact on this understanding, official sources said, “The BP-Reliance Industries agreement does not include venture into acetic acid business.”

Sources said, currently, Gujarat Narmada Valley Fertilisers Company (GNFC) is producing acetic acid.

GNFC's plant is unable to meet the entire domestic demand. GNFC capacity is 1.6 lakh tonnes a year.

The current supply-demand gap is about six lakh tonnes, the official said, adding that the gap is met through imports.

“By the time the joint venture plant is proposed to come up (in 2015), the gap would be about one million tonnes, which is the proposed capacity of this plant.”

IndianOil has recently commissioned a coker unit with one million tonne petcoke capacity at Gujarat Refinery.

The acetic acid will be a good opportunity for enhanced value addition besides providing window for import substitution, the official said.