Indian Oil Corp. has unveiled plans to set up a huge petrochemical complex as well as consolidate its green assets under one umbrella, steps that signals the state-run refiner's intention to balance its overall portfolio by maintaining razor-sharp focus on core businesses while preparing for the changing energy landscape.
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Analysts and company officials said the final approval by IOC to set up a petrochemicals hub in eastern India at a cost of more than $7 billion would take the company closer to achieving a petrochemical intensity index of 14%-15% by 2030, from the current 5%.
It is also an effort by the country's biggest state-run refiner to diversify increasingly into more downstream products to ensure it continues to have a robust future business even if the push toward cleaner fuels and electric vehicles erodes demand for transport fuels.
"IOC is diversifying its product offerings to become an integrated energy conglomerate rather than being solely dependent on sales of transport fuels by pushing investments in oil-to-chemicals, green energy and renewable fuels," said Sumit Ritolia, senior South Asia oil analyst at S&P Global Commodity Insights.
Earlier this week, the IOC board approved the setting up the Paradip Petrochemical Complex in the eastern state of Odisha. The mega project is estimated to cost around Indian Rupees 611 billion ($7.39 billion) and will be IOC's biggest investment in a single location, the company said.
The petrochemical complex will include a cracker unit along with downstream process units for producing several petrochemical products including polypropylene, high density polyethylene, linear low density polyethylene and PVC. It would also aid in the production of niche chemicals and petrochemicals like phenol and isopropyl alcohol.
On commissioning, the project is expected to boost India's self-reliance in the petrochemical sector. Domestically available petrochemicals are expected to provide feed and vitalize industrial growth in key downstream industries like plastic, pharmaceuticals, agrochemical, personal care and paints, IOC said.
"An integrated refinery where refining, petrochemicals and specialty chemical units are interconnected is an approach designed to make refinery operations more sustainable and less volatile to global events and demand the destruction of a certain section of fuels. Also, integrating a refinery with a petrochemical complex offers high-value products and a boost to gross margins." Ritolia added.
Under one umbrella
IOC also recently underscored its intent to consolidate all its existing green assets under one umbrella and rapidly expand its footprint across sustainable energy avenues like biofuels, renewables, green hydrogen and carbon offsets as well as carbon capture, utilization and storage.
"We are scaling up our green endeavors with a definitive focus and, going forward, we will consolidate our green assets under one umbrella for better synergy," IOC chairman Shrikant Madhav Vaidya said.
Vaidya said IOC was aiming to build a portfolio of 3 GW of renewable energy and 0.6 million mt of biofuels by 2025.
By 2030, it plans to have 35 GW of renewable energy, 4 million mt of biofuels and 1 million mt of biogas, which it targets raising to 200 GW of renewable energy, 7 million mt of biofuels and 9 million mt of biogas by 2050.
IOC's current renewable energy portfolio stands at 239 MW, which is being expanded through new wind, solar, hydroelectric and pumped hydro projects.
"We are also collaborating with NTPC to augment our renewable energy capacity by around 2.8 GW. Initiatives in EVs are being intensified by setting up 4,700 charging stations and 66 battery swapping stations," Vaidya said.
IOC said that it had already made its presence felt in India's nascent green hydrogen ecosystem via a firmed-up collaboration with ReNew and Larson & Toubro Limited for green hydrogen businesses.
A 7 kilotons/year green hydrogen capacity is under development at the Panipat refinery, while a demonstration facility for hydrogen dispensing at Gujarat refinery has been installed using hydrogen from the refinery unit, IOC said.
Currently, IOC caters of 9% of India's energy needs and aspires to grow the share to 12% by 2030.