IndianOil mulls petrochemical projects in Oman
New Delhi   21-Dec-2007
State-run petroleum major IndianOil may invest over $5 billion to either set up a gas-based petrochemical complex in Oman or to form a JV with a local company in that country for an existing petrochem complex, according to sources. Industry analysts said that IndianOil is continuously striving for growth through integration of its core business with opportunities available in the petrochemicals sector globally. However, it seems IndianOil would invest in the project only after preliminary studies were completed within a year period. However, question naires sent to IndianOil officials remained unanswered till the time of going to print. In India, the company has initiated various activities for setting up a world’ scale naphtha cracker project along with down stream polymer units at Panipat. To set up a petrochemical plant in the Middle East is more viable for IndianOil because the Gulf countries have 40% of proven global gas reserves. Also ethane, a derivative of gas, is abundant in the Middle East. Apart from its availability, ethane prices are also subsidised. Thus, it gives strong incentives for companies to set up petrochemical operations in the Middle Eastern countries, analysts added. Analysts also suggest that in setting up petrochemical plants in the region, contract pricing for ethane supplies is the same regardless of whether the project is domestically or internationally owned. According to a Lehman Brothers estimate, the new wave of Middle Eastern petrochemical capacity additions will increase the region's share of global capacity to 20% by 2010 from l0 % in 2005. IndianOil, in its last AGM, said that the company is gearing itself to take on the impending challenges with investments of Rs 43,250 crore over the next five years. Of this, Rs 30,000 crore will go into downstream integration. At present, activities for setting up integrated complex of refinery and petrochemicals at Paradip in Orissa have also progressed significantly. Linear Alky l Benzene (CLABFS), which is used for the manufacture of detergent, FGH exane, a light distillate produced mainly used as solvent in the solvent extraction units for vegetable oil, and paraffin wax are the major petrochem products from IndianOil.