Indian Oil’s Petrochemical initiatives at Paradip &

Downstream Opportunities

IOCL PetChem Conclave – 12 Feb 2015

2

Agenda

* Background: PCPIR

* Overview: Paradip Refinery

* Potential Feedstock for downstream Industry

* Investment plans in petrochemicals

* Challenges & enablers

* Summary & Conclusion

3

Agenda

* Background: PCPIR

* Overview: Paradip Refinery

* Potential Feedstock for downstream Industry

* Investment plans in petrochemicals

* Challenges & enablers

* Summary & Conclusion

Petroleum, Chemicals and Petrochemicals sectors are major contributors of India’s economic growth and Regional development.

Setting up PCPIRs provide a major impetus to the Refining, Petrochemicals & Chemicals industries, with an integrated and sustainable approach thereby extracting synergies.

PCPIRs would reap the benefits of co-sitting, networking and greater efficiency through the use of common infrastructure & support services.

“Cost Advantage” through economy of scale, Integrated approach, infrastructure sharing and support services etc is the key differentiator for investment in PCPIRs.

Each PCPIR would have a refinery/Petrochemical feedstocks company as an Anchor Tenant. IndianOil is an Anchor tenant for PCPIR-Paradip.

Paradip Refinery Complex will serve feedstocks to the downstream Petrochemicals & Chemicals industries in PCPIR-Paradip.

Background: PCPIR

5

Agenda

* Background: PCPIR

* Overview: Paradip Refinery

* Potential Feedstock for downstream Industry

* Investment plans in petrochemicals

* Challenges & enablers

* Summary & Conclusion

Refinery Capacity: 15 MMTPA crude oil processing

A grass-root coastal refinery at Paradip

Major primary & secondary units: Atmospheric & Vacuum units, Diesel Hydrotreating Unit, Fluidized catalytic cracking unit, Alkylation unit, Catalytic Reforming unit, DCU, Propylene recovery unit, Sulfur recovery unit etc.

Captive Power Plant: 360 MW

Commissioning Schedule: Q 1 2015 onwards in phased manner

A FCC unit (Indmax-Technology by IOC R&D), of 4.2 MMTPA capacity is under installation at Paradip.

Overview: Paradip Refinery

7

Agenda

* Background: PCPIR

* Overview: Paradip Refinery

* Potential Feedstock for downstream Industry

* Investment plans in petrochemicals

* Challenges & enablers

* Summary & Conclusion

Paradip Refinery: Product profile

Feedstock Capacity (KTA)

Crude Oil 15000

Products Capacity (KTA)

LPG 870

Ethylene Potential 200

Propylene Potential 700

MS 3400

ATF/ SKO 1200

Diesel 5650

Pet coke 1300

Sulfur 250

Internal Fuel & Loss 1430

Total Products 15000

Feedstock for Chemicals

Propylene from cracked LPG ex FCCU

Ethylene from Offgas stream ex FCCU

Petoke : 1300 KTA

Sulfur : 250 KTA

Potential Feedstock

10

Agenda

* Background: PCPIR

* Overview: Paradip Refinery

* Potential Feedstock for downstream Industry

* Investment plans in petrochemicals

* Challenges & enablers

* Summary & Conclusion

700 KTA Polypropylene (PP) plant envisaged based on Propylene from FCCU LPG

Investment approval: March 2014

Project schedule: 42 Months

Expected completion: 2017 Estimated investment : USD 500 MM

Project Status and Milestones:

Project Management Consultant (PMC) on Board

Site Enabling work (Geo- Tech Investigation) : In progress

Execution Agency award - Target : Feb’15

Poly Propylene Project at Paradip

Following downstream Plastic Processing Industry can be set up in PCPIR Paradip based on Polypropylene: Injection Molding Products: Furniture, House wares, Material Handling Crates, etc.

BOPP Film: Flexible packaging, Adhesive tapes

Raffia: Cement Fertilizer bags, Food grain, Sugar packaging

Fiber & Filament: Shopping Bags, Straps & Ropes, medical disposable

TQPP Film: Textile packaging, Confectionery packaging, General purpose Packaging. Thermoforming: Disposable cups & Containers

Poly Propylene (PP): Opportunities for downstream unit at PCPIR, Paradip

Investment Potential in Processor Units : Rs 1200 Crore

Direct Employment : ~ 7000

Indirect Employment Opportunities in Logistics & Support Services

Other Economic Activities

Downstream processing industries based on Poly Propylene (PP) in Odisha

Ethylene Derivative Project at Paradip

14

Post implementation of PP unit at Paradip, Offgas from FCC unit will have a potential of 220 KTA ethylene.

Feasibility of various ethylene derivatives have been examined:

Based on techno-commercial feasibility, an ethylene glycol plant of capacity 325 KTA is planned.

Technology selection & DFR stage

Estimated investment : USD 600 MM (includes ERU)

Expected completion: 2019

Ethylene Glycol: Opportunities for downstream unit at PCPIR, Paradip

Mono ethylene glycol is the main ingredients for Polyesters chips fibers, PET bottle grade chips, PET film grade chips and polyester industrial yarn.

The non polyester applications of ethylene Glycols are in antifreeze, coolants, paint formulations, wire enamels, acrylic binders, alkyed resins, other chemicals etc.

Currently, Eastern region is not having Ethylene Glycol capacity. Consumption of ethylene glycols is the lowest in eastern region.

PX-PTA Complex at Paradip

16

Feasibility study of Paraxylene: 1200 KTA and Purified terepthalic Acid (PTA) : 1200 KTA is in progress.

Continuous catalytic reforming unit (CCRU), front end of PX complex is already under installation at Paradip. PTA is the feedstock for manufacturing of Polyesters chips fibers, PET bottle grade

chips, PET film grade chips and polyester industrial yarn.

With the availability of feedstocks of PTA & MEG at Paradip, an opportunity exists for setting up polyester plants and develop textile hubs in PCPIR.

Estimated capex : USD 1.5 Billion

Expected completion : 2020

Polyester & Textile Hub

17

With availability of MEG & PTA at Paradip, potential exists for development of polyester lines & textile hubs.

Presently, polyester lines predominantly in Western region.

Potential for investment of Rs 2500 Cr with direct employment potential of 1500.

Further downstream industry till finished fabric can mushroom in the form of textile weaving, knitting & processing industry.

Reliable power, infrastructure & other incentives would help in developing downstream industry.

Petcoke Availability: Paradip : 1300 KTA Haldia : 500 KTA Total Petcoke Availability in eastern region : 1800 KTA.

Techno-economic studies is in progress for gasification of the petcoke and utilization of syn gas in production of Ethanol at Paradip. The estimated Capex USD 2.5 billion.

The project is conceptualized in Joint Venture.

Ethanol will predominantly be blended with Petrol.

Availability of Ethanol at Paradip will provide an opportunities to set up derivative plants in PCPIR.

Petcoke Gasification & Downstream

19

Ethanol – market applications

• Bio ethanol

Potable Alcohol

• Bio and synthetic ethanol

Industrial alcohol

• Bio and synthetic ethanol

Blending in MS

Solvents in Pharmaceuticals

Coatings/inks for food/paper packaging

Detergents/cosmetics/mouthwash/lotions

Sulfur Availability : 250 KTA.

Sulfur used in the downstream industries. The major consumers are

IFFCO Paradip & Paradip phosphates in the region.

Usage: The major consumption of sulfur in the production of Sulfuric

Acid. Other application of sulfur is in Dye Stuffs, Paper, Explosives,

Pharma, Rubber Vulcanization etc.

Potential for setting up Sulfuric Acid industry.

Sulphur Availability at Paradip

21

Agenda

* Background: PCPIR

* Overview: Paradip Refinery

* Potential Feedstock for downstream Industry

* Investment plans in petrochemicals

* Challenges & enablers

* Summary & Conclusion

The major constraints in developing Petrochemical projects are:

High Capex.

High volatility in international prices with uncertainty & low margins.

High energy costs (Fuels) in the country resulting in higher Opex.

Petrochemical industry is mainly located in Western region, thereby additional costs for delivering the products to the market place till local market develops.

Challenges in Developing Petrochemicals units at Paradip:

PCPIR would require enabling factors for its establishment . The enabling factors are:

Good Infrastructure

Land

Feedstock & natural resources.

Secured supply of power & utilities

Common effluent treatment

Linkages to existing demand centers

Investment climate & special fiscal incentives

Enabling factors in Developing units at Paradip:

24

Agenda

* Background: PCPIR

* Overview: Paradip Refinery

* Potential Feedstock for downstream Industry

* Investment plans in petrochemicals

* Challenges & enablers

* Summary & Conclusion

Based on experience of IPCL, & other PC complexes, PCPIR would be major growth enabler for chemical industry.

International hubs (Jurong, Al Jubail, Yanbu, Antwerp etc) are success stories.

In the changing Petchem scenario wrt feedstock / fuel costs, and increased regional competition, it is imperative to leverage strengths.

Pursuing refinery – Petchem integration would be way forward for anchor investors.

Based on preliminary interaction, downstream industry players expect reliable power, common infrastructure, suitable incentives schemes to encourage them to put up facilities in the Eastern Region.

Govt support is essential for growth of PCPIR. To facilitate the Investment Govt may consider support by way of suitable financial/tax incentives.

To summarise …..

Thanks !!