Indian Oil Corp. Ltd. (IOC) let a contract to McDermott International Ltd. to provide a suite of services for further expansions of olefins and polymers production at the operator’s 15-million tonne/year (tpy) integrated Panipat refining and chemical complex in Haryana, India, 100-km north of New Delhi.
As part of the July 31 contract award, McDermott will deliver both project management consultancy (PMC) and engineering, procurement, and construction management (EPCM) services for a second phase of IOC’s existing naphtha cracker unit (NCU) expansion project that includes increasing Panipat’s polypropylene production capacity as well as adding a grassroots ethylene derivative unit (EDU), the service provider said.
IOC has yet to officially disclose details regarding the Phase-2 NCU expansion, but McDermott said the project will increase the NCU’s ethylene output by about 20%, with the additional ethylene and associated propylene production to serve as feedstock for unspecified downstream polymer units that will produce polymers used to manufacture household and industrial items, including containers, automobile parts, furniture, and heavy-duty films.
While McDermott confirmed its scope of work covers comprehensive EPCM and overall PMC for the duration of the expansion works, the service provider did not reveal details regarding the type or capacity of the new EDU; a project timelines; or the contract value.
McDermott currently is delivering PMC services covering front-end engineering and design, review of engineering activities, construction supervision services, startup assistance, precommissioning, commissioning, performance guarantee test run, and project closure for the proposed addition of a maleic anhydride (MAH) unit at the Panipat refinery (OGJ Online, May 24, 2023).
Phase 2-NCU expansion prelude
This latest contract award to expand the Panipat complex’s NCU follows IOC’s anticipated completion of its first-phase NCU expansion by the end of July 2023, according to the government of India’s Ministry of Statistics and Programme Implementation’s (MSPI) most recent update on the project as of May 31, 2023.
First approved in August 2018 and previously scheduled for commissioning in August 2020, the Phase-NCU expansion—which suffered delays because of the global pandemic—was to involve:
- Expanding ethylene production capacity of the original 857,000-tpy NCU to 947,000 tpy.
- Increasing capacity of an existing 304,000-tpy monoethylene glycol (MEG) plant to 425,000 tpy.
- Expanding capacity of the site’s 117,000-tpy butadiene extraction unit to 204,000 tpy.
- Installing a new 227,000-tpy ethylene recovery unit (OGJ Online, July 10, 2020; IOC website’s updated project description).
Despite pandemic-related setbacks and a 35-month delay, the Phase-1 NCU expansion—originally approved at investment of 16.36 billion rupees—was still on budget as of May 31, according to MSPI.
Alongside supporting IOC’s ongoing program of establishing a more robust petrochemical presence in line with India’s broader goal to meet rapidly rising domestic demand for chemicals by 2040, the NCU expansion works complement the operator’s ongoing project to increase crude processing capacity at the site by 10 million tpy to 25 million tpy (OGJ Online, July 18, 2023).
Designed to improve operational flexibility of the refinery to help meet domestic energy demand, the Panipat capacity expansion project—which includes installation of a polypropylene unit to be equipped with proprietary technology from LyondellBasell Industries Holdings BV—would also increase production of petrochemicals and value-added specialty products to elevate margins and derisk IOC’s companywide exposure to its conventional fuel business via addition of new units at the integrated olefins and aromatics complex (OGJ Online, Sept. 8, 2022).
Budgeted at an estimated cost of 329.46-billion rupees, the Panipat capacity expansion remains scheduled for commissioning by September 2024, MSPI said in its latest status report on the project.
By 2040, India’s domestic demand for chemicals and petrochemicals is slated to nearly triple from current levels, with 80% of the country’s existing petrochemical production capacity now integrated with its refineries, Hardeep Singh Puri, India’s minister of petroleum and natural gas, said in a May 19 release.
“Going forward, as the chemical market in India grows to $300 billion from the current valuation of $178 billion, we are expecting the coming decade to bring in investments worth more than $87 billion. India is expected to account for more than 10% of the world's growth in petrochemicals,” Puri said.
