Production Management
Overview of Petrochemical Industry
Introduction
Indian Petrochemical Industry
Petrochemicals are the downstream of the oil and
gas industry - an industry whose products affect
our daily lives. Petrochemicals are a part of our
daily lives - the carpeting on which we walk, plastic
soda bottles from which we drink, clothing we
wear, fertilizers that grow our crops, tires we rely
on for transportation, paints we use to brighten
our surroundings, pharmaceuticals we need to
remain healthy, cosmetics, and many other
applications.
Petrochemicals get their raw material - known as
feedstocks - from the refinery: naphtha,
components of natural gas such as butane, and
some of the byproducts of oil refining processes,
such as ethane and propane. These feedstocks are
then cracked to obtain the building blocks of the
petrochemical industry: olefins, that is, mainly
ethylene, propylene, and the so-called C4
derivatives, including butadiene - and aromatics,
mainly benzene, toluene, and the xylenes. These
products are then processed to produce a wide
variety of consumer and industrial products.
Global Petrochemical Industry
Petrochemicals dominates the global chemicals
market with a share of almost 40 percent. The
growth of the chemical industry, currently 2-3
percent above the average world GDP, is likely to
face a slowdown in the coming 2 years owing to
the global economic slowdown.
The coming years are expected to see the
petrochemicals industry undergoing a major
metamorphosis, particularly with the Middle East
building its strength as a major petrochemicals
supplier and China emerging as a major processing
hub and end-use market for petrochemicals. The
chart below shows the flow of raw materials from
the Middle East to the processing hubs and end-
use markets of China and India from where the
finished products will reach the markets of North
America and Europe.
Asian markets are undergoing a sea change in theform of high demand markets for petrochemicals. It was projected that the coming years will see China, India, and the rest of Asia becoming hubs for processing of end products as well as a high demand end-use market. By 2018, 60 percent of the petrochemical growth is likely to take place in Asia, with China accounting for about one-third of the growth. However, with the recent recession hitting the industry, Asian markets also have been affected since Europe and North America have cut down on import of finished goods. Even though Asia is expected to soon become a significant end-use market, the current world economic scenario will have a negative effect on the industry and instead of growing at about 2-3 percent above GDP; the market is expected to grow at a much lower rate. However, this recession will affect the Western markets more than Asian ones.
Petrochemical Industry in India
The petrochemical industry has been one of the of
the fastest growing industries in the Indian
economy; it provides the foundation for
manufacturing industries such as pharmaceuticals,
construction, agriculture, packaging industry,
textiles, automotive, etc.
The petrochemical industry in India is oligopolistic
with four main players dominating the market,
namely Reliance Industries Ltd. (RIL) along with
Indian Petrochemical Ltd. (IPCL), Gas Authority of
India Ltd (GAIL), and Haldia Petrochemicals Ltd.
(HPL).
Currently, India has three naphtha- and three gas -based cracker complexes with a combined ethylene annual capacity of over 2.5 MMTA. Besides, there are four aromatic complexes also with a combined Xylenes capacity of 2.9 MMTA. Polymers account for more than 60 percent of total petrochemical production. As shown in the figure below, the industry has been stagnant in
terms of capacity addition. Combining the demand for all the key segments in the petrochemical industry, aggregate demand for the entire petrochemical sector in India was around 20 MMTA in 2008
Manufacturing and M
arketing Practices and Strategies
Manufacturing Practices
Natural gas and crude distillates such as naphtha (from petroleum refining) are used as feedstocks to manufacture a wide variety of petrochemicals which are in turn used for the manufacture of a variety of consumer goods. The description of petrochemical processes and products presented here is for illustrative purposes only. The basic petrochemicals manufactured by cracking, reforming, and other processes include olefins (including ethylene, propylene, butylenes, and butadiene) and aromatics (including benzene, toluene, and xylenes). The capacity of naphtha crackers is generally of the order of 250,000 to 750,000 metric tons per year (tpy) of ethylene production. Some petrochemical plants also have alcohol and oxo-compounds manufacturing units on-site. The base petrochemicals or products derived from them along with other raw materials are converted to a wide range of products including resins and plastics (such as low density polyethylene (LDPE), high density polyethylene (HDPE), linear low density polyethylene (LLDPE), polypropylene, polystyrene, and polyvinyl chloride (PVC)); synthetic fibers (such as polyester and acrylic); engineering polymers (such as acrylonitrile butadiene styrene (ABS)); rubbers (including styrene butadiene rubber (SBR) and polybutadiene (PBR)); solvents; industrial chemicals (including those used for the manufacture of detergents such as linear alkyl benzene (LAB), coatings, dyestuff, agrochemicals, pharmaceuticals, and explosives). A number of alternative methods are available to manufacture the desired products.
Waste Characteristics
Fugitive air emissions from pumps, valves, flanges, storage tanks, loading and unloading operations, and wastewater treatment are of greatest concern. Some of the compounds released to air are carcinogenic or toxic. Ethylene and propylene emissions are of concern because of their fate processes which lead to the formation of oxides
which are extremely toxic. Compounds considered carcinogenic that may be present in air emissions include benzene, butadiene, 1,2-dichloroethane, and vinyl chloride. A typical naphtha cracker at a petrochemical complex may annually release about 2,500 emetric tons of alkenes (such as propylenes and ethylene), when producing 500,000 metric tons of ethylene. Boilers, process heaters, flares, and other process equipment (in some cases may include catalyst regenerators)are responsible for the emission of particulates, carbon monoxide, nitrogen oxides (200 metric tons per year), and sulfur oxides (SOx) (600 metric tons per year based on a 500,000 metric tons per year of ethylene capacity).
The release of volatile organic compounds (VOCs) to air depends on the products handled at the plant and may include acetaldehyde, acetone, benzene, toluene, trichloroethylene, trichlorotoluene, and xylene. VOC emissions are mostly fugitive and depend upon the production processes, material handling and effluent treatment procedures, equipment maintenance, and climatic conditions. VOC emissions from a naphtha cracker range from 0.6 to 10 kilograms (kg) (75% are alkanes, 20% unsaturated hydrocarbons about half of these is ethylene, and remaining 5% are aromatics) per metric ton of ethylene; 0.02 to 2.5 kg (45% of these being ethylene dichloride, 20% being vinyl chloride, and 15% being chlorinated organics) per metric ton of product in a vinyl chloride plant; 3-10 kg per metric ton of product in a SBR plant; 0.1-2 kg per metric ton of product in ethyl benzene plant; 1.4-27 kg per metric ton of product in ABS plant; 0.25-18 kg per metric ton of product in a styrene plant; and 0.2-5 kg per metric ton of product in a polystyrene plant.
Petrochemical units generate wastewaters from process operations (such as vapor condensation), cooling tower blow down, and storm water run off. Process wastewaters are generated at a rate of about 15 cubic meters per
hour (m3/hr) (based on a 500,000 metric tons per year ethylene production) and may contain biochemical oxygen demand (BOD5) (100 mg/L), COD (1,500-6,000 mg/L), suspended solids (100-400 mg/L), and oil and grease (30-600 mg/L). Phenol levels of up to 200 mg/L and benzene levels of up to 100 mg/L may also be present.
Petrochemical plants also generate solid wastes and sludges, some of which may be considered hazardous because of the presence of
toxic organics and heavy metals. Spent caustic and other hazardous wastes such as distillation residues associated with units handling acetaldehyde, acetonitrile, benzyl chloride, carbon tetrachloride, cumene, phthallic anhydride, nitrobenzene, methyl ethyl pyridine, toluene diisocyanate, trichloroethane, trichloroethylene, perchloroethylene, aniline, chlorobenzenes, dimethyl hydrazine, ethylene dibromide, toluenediamine, epichlorohydrin, ethyl chloride, ethylene dichloride, and vinyl chloride may be generated in significant quantities. Accidental discharges as a result of abnormal operation especially from polyethylene and ethylene-oxide-glycol plants in a petrochemical complex can be a major environmental hazard releasing large quantities of pollutants and products into the environment. Plant safety and fire prevention and control procedures should be in place
Pollution Prevention and Control
Petrochemical plants are typically large and complex, where the combination and sequence of processes is usually very specific to the characteristics of the products manufactured. Specific pollution prevention or source reduction measures are best determined by technical staff. However, there are a number of broad areas where improvements are often possible and site specific emission reduction measures in these areas should be designed into the plant and targeted by plant management.
Areas where effort should be concentrated include:
Reduction of Air Emissions
• Minimize the leakages of volatile organics (including benzene, vinyl chloride, and ethylene oxide) from valves, pump glands (use mechanical seals), flanges, and other process equipment by following good design practices and equipment maintenance procedures.
• Use mechanical seals, where appropriate.
• Minimize losses from storage tanks, product transfer areas, and other process areas by adopting methods such as vapor recovery systems and double seals (for floating roof tanks).
• Recover catalysts and reduce particulate emissions.
• Use low NOx burners to reduce NOx emissions.
• Optimize fuel usage.
• In some case, organics that cannot be recovered, are effectively destroyed by routing them to flares and other combustion devices.
Elimination/Reduction of Pollutants
• Use non-chrome based additives in cooling water.
• Use long life catalysts and regeneration to extend the cycle.
463 Petrochemicals Manufacturing
Recycling/Reuse
• Recycle cooling water and treated wastewater to the extent feasible.
• Recover and re-use spent solvents and other chemicals to the extent feasible.
Improved Operating Procedures
• Segregate process wastewaters from stormwater systems.
• Optimize tank and equipment cleaning frequency.
• Prevent solids and oily wastes from entering the drainage system.
• Establish and maintain an Emergency Preparedness and Response Plan.
Target Pollution Loads
Implementation of cleaner production processes and pollution prevention measures can provide both economic and environmental benefits. The following production-related targets can be
achieved by measures such as those detailed in the previous section. The figures relate to the production processes before the addition of pollution control measures.
A good practice target for petrochemical complex is that the total organic emissions (including VOCs) from the process units be reduced to 0.6% of the throughput. Target maximum levels for air releases of ethylene, ethylene oxide, vinyl chloride, and 1,2-dichloroethane are 0.06 kg, 0.02 kg, 0.2 kg, and 0.4 kg per ton of product. Methods of estimating these figures include ambient and emissions monitoring, emission factors, and inventories of emissions sources. Design assumptions should be recorded to allow for subsequent computation and reduction of losses.
Vapor recovery systems to control losses of VOCs from storage tanks and loading areas should achieve close to 100% recovery.
A wastewater generation rate 15 m3 per 100 tons of ethylene produced is achievable with good design and operation and new petrochemicals should strive to achieve this.
Treatment Technologies
Air Emissions
Control of air emissions normally includes the capturing and recycling or combustion of emissions from vents, product transfer points, storage tanks, and other handling equipment.
Catalytic cracking units should be provided with particulate removal devices. Particulate removal technologies include fabric filters, ceramic filters, wet scrubbers, and electrostatic precipitators. Gaseous releases are minimized by condensation, absorption, adsorption (activated carbon, silica gel, activated alumina, and zeolites), and in some cases using biofiltration and bioscrubbing (using peat/heather, bark, composts, and bioflora for treating biodegradable organics), and thermal decomposition.
Liquid Effluents
Petrochemical wastewaters often require a combination of treatment methods to remove oil
and other contaminants before discharge. Separation of different streams (such as stormwater) is essential to minimize treatment requirements. Oil is recovered using separation techniques. For heavy metals, a combination of oxidation/reduction, precipitation, and filtration is used. For organics, a combination of air or steam stripping, granular activated carbon, wet oxidation, ion exchange, reverse osmosis, and electrodialysis is used. A typical system may include neutralization, coagulation/flocculation, flotation/sedimentation/filtration, biodegradation (trickling filter, anaerobic, aerated lagoon, rotating biological contactor, and activated sludge), and clarification. A final polishing step using filtration, ozonation, activated carbon, or chemical treatment may also be required. Pollutants loads which can be achieved include a COD level of less than 1 kg, suspended solids level of less than 0.4 kg, and dichloroethane level of less than 0.001 kg, per 100 tons of ethylene produced..
Marketing Strategy
Petrochemical business being an oligopoly has few strong players who cater to almost the entire needs of the markets.
Today the Indian petrochemical market can boast of having international standards because it has the blend of low cost coupled with high class infrastructure.
Indian petrochemical market today has high demand elasticity with high volume industries and the Indian petrochemical sector is a capital intensive sector. With the rapid growth of the middle class in India, the demand for petrochemical goods is anticipated to increase manifold. Reliance Industries, Nocil, and the IPCL are the 3 major companies which can boast of having fully-integrated plants.
Indian petrochemical sector was operated and mastered by the state-owned IPCL till the early 90s. Nocil was the only private sector enterprise set up with modest infrastructure and capacity .However, after liberalization, IPCL and Reliance came up with large-sized plants. 70% of the output of the Indian petrochemical sector constitutes polymers, and in the last few years, the growth rate of these industries has been 16-18% per annum. These petrochemical objects are sold through stockists, C&F channels, and distributors. The companies directly meet the large volume sale. Prices are determined by international pricing and are very volatile in nature.
Manufacturing Process
Manufacturing process of
Petrochemical Industry
(Oil Refinery)
Crude oil is separated into fractions by fractional
distillation.The fractions at the top of the
fractionating column have lower boiling points
than the fractions at the bottom. The heavy
bottom fractions are often cracked into lighter,
more useful products. All of the fractions are
processed further in other refining units.
Raw or unprocessed crude oil is not generally
useful. Although "light, sweet" (low viscosity, low
sulfur) crude oil has been used directly as a burner
fuel for steam vessel propulsion, the lighter
elements form explosive vapors in the fuel tanks
and are therefore hazardous, especially in
warships. Instead, the hundreds of different
hydrocarbon molecules in crude oil are separated
in a refinery into components which can be used
as fuels, lubricants, and as feedstock in
petrochemical processes that manufacture such
products as plastics, detergents, solvents,
elastomers and fibers such as nylon and
polyesters. Petroleum fossil fuels are burned in
internal combustion engines to provide power for
ships, automobiles, aircraft engines, lawn mowers,
chainsaws, and other machines. Different boiling
points allow the hydrocarbons to be
separated by distillation. Since the lighter liquid
products are in great demand for use in internal
combustion engines, a modern refinery will
convert heavy hydrocarbons and lighter gaseous
elements into these higher value products.
Oil can be used in a variety of ways because it
contains hydrocarbons of varying molecular
masses, forms and lengths such as paraffins,
aromatics, naphthenes (or cycloalkanes), alkenes,
dienes, and alkynes.
While the molecules in crude oil include
different atoms such as sulfur and nitrogen,
the hydrocarbons are the most common form
of molecules, which are molecules of varying
lengths and complexity made of hydrogen
and carbon atoms, and a small number of
oxygen atoms. The differences in the
structure of these molecules account for their
varying physical and chemical properties, and
it is this variety that makes crude oil useful in
a broad range of applications. Once separated
and purified of any contaminants and
impurities, the fuel or lubricant can be sold
without further processing. Smaller molecules
such as isobutane and propylene or butylenes
can be recombined to meet specific octane
requirements by processes such as alkylation,
or less commonly, dimerization. Octane grade
of gasoline can also be improved by catalytic
reforming, which involves removing hydrogen
from hydrocarbons producing compounds
with higher octane ratings such as aromatics.
Intermediate products such as gasoils can
even be reprocessed to break a heavy, long-
chained oil into a lighter short-chained one,
by various forms of cracking such as fluid
catalytic cracking, thermal cracking, and
hydrocracking. The final step in gasoline
production is the blending of fuels with
different octane ratings, vapor pressures, and
other properties to meet product
specifications.
Oil refineries are large scale plants,
processing about a hundred thousand to
several hundred thousand barrels of crude oil
a day. Because of the high capacity, many of
the units operate continuously, as opposed to
processing in batches, at steady state or
nearly steady state for months to years. The
high capacity also makes process optimization
and advanced process control very desirable.
Petroleum products are usually grouped into
three categories: light distillates (LPG, gasoline,
naphtha), middle distillates (kerosene, diesel),
heavy distillates and residuum (heavy fuel oil,
lubricating oils, wax, asphalt).
This classification is based on the way crude oil is
distilled and separated into fractions (called
distillates and residuum) as in the above drawing.
• Liquified petroleum gas (LPG)
• Gasoline (also known as petrol)
• Naphtha
• Kerosene and related jet aircraft fuels
• Diesel fuel
• Fuel oils
• Lubricating oils
• Paraffin wax
• Asphalt and tar
• Petroleum coke
Flow Diagram of Typical Oil Refinery
Common process units found in a
refinery
Desalter unit washes out salt from the crude oil
before it enters the atmospheric distillation unit.
Atmospheric distillation unit distils crude oil into
fractions. See Continuous distillation.
Vacuum distillation unit further distils residual
bottoms after atmospheric distillation.
Naphtha hydrotreater unit uses hydrogen to
desulfurize naphtha from atmospheric
distillation. Must hydrotreat the naphtha
before sending to a Catalytic Reformer unit.
Catalytic reformer unit is used to
convert the naphtha-boiling range
molecules into higher octane reformate
(reformer product).
The reformate has higher content of
aromatics and cyclic hydrocarbons). An
important by-product of a reformer is
hydrogen released during the catalyst
reaction. The hydrogen is used either in
the hydrotreaters or the hydrocracker.
Distillate hydrotreater unit desulfurizes distillates
(such as diesel) after atmospheric distillation.
Fluid catalytic cracker (FCC) unit upgrades heavier
fractions into lighter, more valuable products.
Hydrocracker unit uses hydrogen to upgrade
heavier fractions into lighter, more valuable
products.
Visbreaking unit upgrades heavy residual
oils by thermally cracking them into
lighter, more valuable reduced viscosity
products.
Merox unit treats LPG, kerosene or jet fuel by
oxidizing mercaptans to organic disulfides.
Coking units (delayed coking, fluid
coker, and flexicoker) process very
heavy residual oils into gasoline and
diesel fuel, leaving petroleum coke as a
residual product.
Alkylation unit produces high-octane component
for gasoline blending.
Dimerization unit converts olefins into
higher-octane gasoline blending
components. For example, butenes can be
dimerized into isooctene which may
subsequently be hydrogenated to form
isooctane. There are also other uses for
dimerization.
Isomerization unit converts linear
molecules to higher-octane branched
molecules for blending into gasoline or
feed to alkylation units.
Steam reforming unit produces hydrogen for the
hydrotreaters or hydrocracker.
Liquified gas storage units store
propane and similar gaseous fuels at
pressure sufficient to maintain them in
liquid form. These are usually spherical
vessels or bullets (horizontal vessels
with rounded ends.
Storage tanks store crude oil and finished
products, usually cylindrical, with some sort
of vapor emission control and surrounded
by an earthen berm to contain spills.
Slug catcher used when product (crude
oil and gas) that comes from a pipeline
with two-phase flow, has to be buffered
at the entry of the units.
Amine gas treater, Claus unit, and tail
gas treatment convert hydrogen sulfide
from hydrodesulfurization into
elemental sulfur.
Utility units such as cooling towers
circulate cooling water, boiler plants
generates steam, and instrument air
systems include pneumatically operated
control valves and an electrical
substation.
Wastewater collection and treating
systems consist of API separators,
dissolved air flotation (DAF) units and
further treatment units such as an
activated sludge biotreater to make water
suitable for reuse or for disposal.[3]
Solvent refining units use solvent such as
cresol or furfural to remove unwanted,
mainly asphaltenic materials from
lubricating oil stock or diesel stock.
Solvent dewaxing units remove the heavy waxy
constituents petrolatum from vacuum distillation
products.
Logistics & Supply Chain Processes
Supply chain management in the petroleum
industry contains various challenges, specifically in
the logistics area, that are not present in most
other industries. These logistical challenges are a
major influence on the cost of oil and its
derivatives.
However, opportunities for cost savings in
logistics still do exist. The steadily increasing
global demand for oil and its derivatives such
as petrochemicals has enabled companies
Providing these products to reach more
customers and increase their market share and
profitability.
This boom in global demand along with the ease of
international trade and the inflexibility1 involved
in the petroleum industry’s supply chain has made
its management more complex and more
challenging.
The logistics network in the petroleum industry is
highly inflexible, which arises from the production
capabilities of crude oil suppliers, long
transportation lead times, and the limitations of
modes of transportation. Every point in the
network, therefore, represents a major challenge.
The oil and petrochemical industries are global in
nature. As a result, these commodities and
products are transferred between locations that
are—in many cases—continents apart. The long
distance between supply chain partners and slow
modes of transportation induce not only high
transportation costs and in-transit inventory, but
also high inventory carrying costs in terms of
safety stocks at the final customer location. The
great distances between supply chain partners
present a high variability of transportation times
that can hurt suppliers in terms of service levels
and final customers in terms of safety stock costs.
Moreover, the transportation
process is carried out either by ships, trucks,
pipelines, or railroads. In many instances, a
shipment has to exploit multiple transportation
modes before reaching the final customer’s
location. “Very few industries deal with that kind
of complexity in shipping,” said Doug Houseman, a
senior manager at the consulting firm Accenture
(Morton, 2003, p. 31). Such constraints on
transportation modes in this type of industry
induce long lead times from the shipping point to
the final customers’ location compared to other
industries.
Hence, considering the amount of inflexibility
involved, meeting the broadening prospect of oil
demand and its derivates while maintaining high
service-levels and efficiency is a major challenge in
the petroleum industry.
The supply chain of the petroleum industry is
extremely complex compared to other industries.
It is divided into two different, yet closely related,
major segments: the upstream and downstream
supply chains.
The upstream supply chain involves the acquisition
of crude oil, which is the specialty of the oil
companies. The upstream process includes the
exploration, forecasting, production, and logistics
management of delivering crude oil from remotely
located oil wells to refineries. The upstream sector
includes the searching for potential underground
or underwater oil and gas fields, drilling of
exploratory wells, and subsequently operating the
wells that recover and bring the crude oil and/or
raw natural gas to the surface.
The downstream supply chain starts at the
refinery, where the crude oil is manufactured into
the consumable products that are the specialty of
refineries and petrochemical companies.
The downstream supply chain involves the process
of forecasting, production, and the
logistics management of delivering the crude oil
derivatives to customers around the globe.
Challenges and opportunities exist now in both the
upstream and downstream supply chains.
Exploration –Visible surface features such as
oil seeps, natural gas seeps, pockmarks
(underwater craters caused by escaping gas)
provide basic evidence of hydrocarbon generation
(be it shallow or deep in the Earth). However, most
exploration depends on highly sophisticated
technology to detect and determine the extent of
these deposits using exploration geophysics areas
thought to contain hydrocarbons are initially
subjected to a gravity survey, magnetic
survey, passive seismic or regional seismic
reflection surveys to detect large scale features of
the sub-surface geology. Features of interest
(known as leads) are subjected to more detailed
seismic surveys which work on the principle of the
time it takes for reflected sound waves to travel
through matter (rock) of varying densities and
using the process of depth conversion o create a
profile of the substructure. Finally, when a
prospect has been identified and evaluated and
passes the oil company's selection criteria, an
exploration well is drilled in an attempt to
conclusively determine the presence or absence of
oil or gas.
Oil exploration is an expensive, high-risk
operation. Offshore and remote area exploration is
generally only undertaken by very
large corporations or national governments.
Typical Shallow shelf oil wells (e.g. North sea) cost
USD$10 – 30 Million, while deep water wells can
cost up to USD$100 million plus.
Extraction of petroleum is the process by
which usable petroleum is extracted and removed
from the earth. The oil well is created by drilling a
hole into the earth with an oil rig. A steel pipe
(casing) is placed in the hole, to provide structural
integrity to the newly drilled wellbore. Holes are
then made in the base of the well to enable oil to
pass into the bore. Finally a collection of valves
called a "Christmas Tree" is fitted to the top, the
valves regulating pressures and controlling flows.
Logistics management - Delivering crude
oil from remotely located oil wells to refineries.
This is done mainly with the help of oil tankers and
pipelines.
The logistics network in the petroleum industry is
highly inflexible, which arises from the production
capabilities of crude oil suppliers, long
transportation lead times, and the limitations of
modes of transportation. Every point in the
network, therefore, represents a major challenge
Downstream Process:
Oil refinery or petroleum refinery: is
an industrial process plant where crude oil is
processed and refined into more useful petroleum
products, such as gasoline, diesel fuel, asphalt
base, heating oil, kerosene, and liquefied
petroleum gas. Oil refineries are typically large
sprawling industrial complexes with
extensive piping running throughout, carrying
streams of fluids between large chemical
processing units. In many ways, oil refineries use
much of the technology of, and can be thought of
as types of chemical plants.
The crude oil feedstock has typically been
processed by an oil production plant. There is
usually an oil depot (tank farm) at or near an oil
refinery for storage of bulk liquid products.
An oil refinery is considered an essential part of
the downstream side of the petroleum industry.
Raw or unprocessed crude oil is not generally
useful. Although "light, sweet" (low viscosity,
low sulfur) crude oil has been used directly as a
burner fuel for steam vessel propulsion, the lighter
elements form explosive vapors in the fuel tanks
and are therefore hazardous, especially
in warships. Instead, the hundreds of different
hydrocarbon molecules in crude oil are separated
in a refinery into components which can be used
as fuels, lubricants, and as feedstock
in petrochemical processes that manufacture such
products
as plastics, detergents, solvents, elastomers and fi
bers such as nylon and polyesters.
Petroleum products are usually grouped into three
categories: light distillates (LPG, gasoline,
naphtha), middle distillates (kerosene, diesel),
heavy distillates and residuum (heavy fuel oil,
lubricating oils, wax, asphalt). This classification is
based on the way crude oil is distilled and
separated into fractions
(called distillates and residuum).
Distribution and marketing:
This part of the petroleum supply chain comprises
the transport of finished fuels from the
door of the refinery to consumers and the sale of
the products either in bulk or in small quantities in
gas stations.
The distribution of finished products is made by
pipeline, tanker, truck, rail or barge. The
quantities transported are smaller (typically 10 to
50,000 tons) than in the case of crude oil(generally
over 100,000 tons) and therefore the economies
of scale are less important than in the case of
bigger crude oil tankers.
Sales may target the direct delivery to big
consumers (e.g., heating oil, heavy oil for
power plants) or the retail selling through a
network of service stations.
In the case of the network of service stations, fuel
retailing is a well differentiated part of the
business where marketing strategies are critical.
Fuel retailing is similar in some aspects to the
consumer products goods industry.
Therefore, this part of the business presents
rather different challenges in supply chain than the
refining or upstream activities, less focused on
final consumer needs.
Cost Drivers
The petrochemical industry consumes some of the oil production and gas production as well. For operation costs of a petrochemical plant, the purchase of energy and feedstock would take around 50%.
People working for petrochemical plants have jobs ranging from research scientists to equipment operators. There is also a notably higher percentage in productivity per worker because of the large investment in equipments.
The technology under the petrochemical industry engages in high pressures and temperatures, generally requiring world class engineering, not to mention the equipment, to be able to use the energy in an efficient manner.
On the other hand, the government control can also have an effect in the industry. The price of gas and oil is especially crucial to the international competitiveness of the petrochemical industry.
When the environment is concerned, the petrochemical industry made its mark in controlling unwanted emissions from the plant. As compared to other resource industries, the emissions are quite low per unit of output. Usually gaseous, emissions can arise from production processes of the plant, from handling to storage. In addition, this particular industry does not generate large volumes of contaminated water, and is prevented from doing so.
The life span of this industry is infinite, for as long as the population continues to use and make use of such materials, this industry has enough oxygen to breath.
Challenges and SWO
T Analysis
The Indian petrochemical industry faces a number
of challenges for sustained growth, putting India at
a competitive disadvantage in the competition
with China. India's ethylene capacity is far smaller
than China's and is unlikely to rise above its Asian
rival's levels in the next 5-7 years. This will make it
impossible for India to develop applications
further downstream.
The availability of new hydrocarbon resources in
India has spurred the demand for petrochemicals
in the country and spawned an industry that is
based largely on captive and low-cost feedstock.
There is no denying that opportunities in the
petrochemicals business must be capitalized upon
for growth. Today, the petrochemical industry is
driven by size and cutting-edge technology. In the
current competitive environment, small-sized
plants make no sense.
Following are the challenges facing
India petrochemical industry:
High cost of energy and feedstock and the
impact on demand
The transformation in the kinetics of
competition in manufacturing
Increase in the cost of project
Problems faced by the India
petrochemical industry:
The manufacturing units mostly use
obsolete format of technology and are
not able produce optimally
There is a necessity for the
modernization of equipments
Excise duty on synthetic fiber should be
rationalized
Prevention of reservation on Small Scale
Units
Plastic waste to be recycled and the
littering habits to be discouraged
India requires advantage on feedstock, so
the import cost has to be brought down
The industry should have access to the
primary amenities of infrastructure
However, on a positive note, the challenges facing
India petrochemical industry provides the industry
with better tools which would in turn help the
growth of the economy.
SWOT Analysis:
The Indian petrochemicals industry is finally
discarding its nascent stage tag and the
companies are now vying for a major chunk of
the global pie of the petrochemicals market.
Indian major Reliance has recently acquired a
German polyester major Trevira GmbH and
this marks the private sector giant's entry into
the European markets in a big way. At the
same time, ONGC and IOC are planning entry
into the business in a major way as this is in
line with their forward integration plans. The
petrochemicals cycle is currently on a global
uptrend thanks to growing demand from
China and other developing nations. In the
domestic markets, growing activity in
infrastructure and construction segments
coupled with strong growth in the auto sector
on the back of lower interest rates have
actually boosted the performance of the
petrochemicals sector. Major beneficiaries of
this uptrend are the integrated players such as
Reliance Industries, GAIL and IPCL (to some
extent).
A low per capita consumption of 4 Kgs of
plastic as compared to a global average of 20
Kgs leaves enough scope for capacity
expansion resulting in ONGC and IOC
venturing into the business. The following are
the major uses of the products:
Strengths of Indian Petrochemical
industry -
Large and very fast growing Indian
petrochemical market
Huge trained talent pool
Competitive labour cost
Weaknesses of Indian
Petrochemical industry –
Insufficient basic infrastructure for
the petrochemical industry
High feedstock cost in comparison to
Middle East countries
Prevalence and use of old technology
Synthetic fibre industry is
unorganized and operates in small
clusters
Opportunities in Indian
Petrochemical industry –
Huge demand for polymer and
synthetic fibre
Great opportunity for product
development exists
Low consumption of polymer in
comparison to global consumption
rate
Threats to Indian Petrochemical
industry –
Stiff competition from other regional
players like, china and the Middle
East countries
Stiff rational pricing pressures
Environmental hazards concerns
Low market recognition
Relocation of manufacturing sites to
region with abundance of feedstock
Conclusion
India has stably established itself in the core of the
international production of petrochemical and
petrochemical- related products in the present
scenario.
The global economy is a dynamic and ever-growing
one in spite of the high cost of energy. This in turn
is forging the demand for petrochemicals. The
strong growth in demand is not backed by a
sufficient supply so the cost is still to come down.
Operating rates of major petrochemical product
segments are very high presently.
The major driver for the growth of petrochemical
industry in India is its (India's)ongoing economic
development. With the Government announcing
an infrastructure development program of over
INR 500 Billion, coupled with growth in key end-
use sectors like auto, personal / lifestyle products,
and retail (packaging), a boost is expected in the
demand for petrochemical products in India. The
Government has set in place policies to promote
investment in the petrochemical sector, and
several key domestic companies have unveiled
ambitious expansion plans for the next few years.
Two major elements in this support are the
decision to allow 100 percent foreign direct
investment projects in this sector, and
establishment of a series of special economic
zones (SEZs) and a number of petroleum,
chemicals, and petrochemical investment regions
(PCPIRs).
The refining capacity in India is expected to rise to
210-225 MMTA in 2011-12, translating into
increased availability of 8-10 MMTA of naphtha.
This additional availability of naphtha has already
prompted petrochemical majors to announce
major downstream expansions in naphtha
crackers. The olefin-based capacity is expected to
increase from 5 MMTA to 10 MMTA and aromatics
based capacity is expected to increase from 3
MMTA to 6 MMTA.
The future of the Indian petrochemicals industry is bright with domestic demand driving the market for products. With Government support slowly falling into place, the future could see more investments from multinationals as well as domestic companies.
