Government-owned Hindustan Petroleum Corporation Ltd (HPCL) has planned large-scale investments in setting up petrochemical manufacturing facilities to meet India’s growing demand in tune with expanding economy, with increased focus on infrastructure development. The public sector company aims to expand crude oil refining and petrochemical manufacturing without compromising on the carbon emissions reduction target to achieve net zero by 2040.
Without specifying the proposed investment amount or quantifying the volume of manufacturing facilities, HPCL Chairperson Pushp Kumar Joshi stated in the Annual Report 2023-24 released on Monday, “The company is actively pursuing large-scale investments to build petrochemical manufacturing capacities through joint ventures and expand its petrochemical portfolio.” HPCL is looking to strengthen its petrochemical portfolio through greenfield and brownfield routes in the public and private sector.
The oil refining and marketing company is presently setting up India’s first integrated grass-root refinery-cum-petrochemical complex at Pachpadra (Balotra) in Rajasthan. This is a joint project between HPCL and the Rajasthan government under the title of HPCL Rajasthan Refinery Limited (HRRL). This refinery-cum-petrochemical complex has the Petrochemical Intensity Index (PII) of 26 percent, which is the highest in India. The project is in the advanced stage of completion. Leveraging ‘HP Durapol’ brand, HPCL recorded total sales of 45.6 thousand metric tonnes (TMT) of polymers during the financial year (FY) 2023-24. During the year, HPCL established a separate Strategic Business Unit (SBU) of petrochemicals to ensure focused business strategies in expanding the petrochemical portfolio.
Meanwhile, HPCL proposes to commence two separate projects for Linear Low Density Polyethylene (LLDPE)/High Density Polyethylene (HDPE) production, each with a capacity of 550,000 tonnes per annum, in 2024. Additionally, HPCL is commencing a 1 million tonnes PP project in 2024. Chennai Petroleum and Indian Oil Corporation have decided to commercialize their PP production capacities of 475,000 tonnes per annum and 450,000 tonnes respectively this year.
| HPCL’s capital expenditure status |
| Financial year | Amount (Rs crore) |
| 2023-24 | 14,342 |
| 2022-23 | 14,043 |
| 2021-22 | 16,772 |
| 2020-21 | 14,630 |
Sources: Hindustan Petroleum Corporation Ltd Annual Report FY2023-24, and Polymerupdate Research
Capex in recent yearsAccording to the company’s Annual Report 2023-24, HPCL incurred a total expenditure of Rs 14,342 crore during FY2023-24, compared to Rs 14,043 crore, Rs 16,772 crore, and Rs 14,630 crore in FY2022-23, FY2021-22, and FY2020-21, respectively. The company has made a notable shift in its investment strategy and plans to invest significantly in renewables, biofuels, natural gas, alternate fuels to realise its ambition of net zero.
To meet the country’s growing demand for petroleum products, the company maximized crude processing in both Visakh and Mumbai refineries. During the year, the company achieved the highest-ever combined refining throughput of 22.3 million metric tonnes (MMT), with a capacity utilisation of 103 percent. The robust refinery reliability and standardised operating processes contributed to the production of the highest-ever volumes of MS (Motor Spirit), HSD (High Speed Diesel), LPG (Liqefied Petroleum Gas) and Lube Oil Based Stock (LOBS) during the year.
The refineries embraced opportunity crudes and exhibited adaptability in processing new grades of crudes, which helped in enhancing performance. A combined Gross Refining Margin (GRM) of US$ 9.08 a barrel has been recorded during the year. In a noteworthy development, the Visakh Refinery Modernisation Project (VRMP) was dedicated to the nation last year. Being set up with a cost of over Rs 26,000 crore, VRMP is the biggest investment in the oil sector on the East Coast and stands as a testament to HPCL’s commitment to enhancing product availability and contributing significantly to the region’s energy security.
| India’s aggregate petrochemical demand |
| Financial year | Demand (million tonnes) | Demand growth (%) |
| 2024-25(f) | 61 | 7.02 |
| 2023-24(f) | 57 | 7.54 |
| 2022-23 | 53 | 8.16 |
| 2021-22 | 49 | 13..95 |
| 2020-21 | 43 | (-)8.51 |
| 2019-20 | 47 | 7.00 |
Source: Chemicals and Petrochemicals Manufacturers Association (CPMA); (f)=forecast
Energy transitionHPCL is uniquely poised to use its vast resource base to transition to new energy and net zero projects. Towards this, HPCL plans to raise innovative forms of capital, balancing the goals of energy security and the green transition, while delivering maximum return to stakeholders. HPCL is aligned with the government of India’s promotion of the usage of biofuels in the transportation sector, which contributes to energy security, environmental sustainability and social benefits.
During the year, the company achieved ethanol blending of 12 percent by blending 1,560 million litres of ethanol in motor spirit (MS). HPCL’s first Compressed Biogas (CBG) plant in Budaun, (Uttar Pradesh), has stabilized operations and commenced its commercial sale. During the year, a CBG plant of 100 tonnes per day (TPD) of cow dung processing capacity was also commissioned at Pathmeda, (Rajasthan) under the CSR scheme.
The 2G ethanol plant being set up in Bathinda, Punjab, is nearing completion, showcasing the organisation’s commitment to sustainable fuels. HPCL is actively participating in the SATAT (Sustainable Alternative Towards Affordable Transportation) initiatives to promote CBG. Five CBG Plants were commissioned during the year, bringing the total to nine plants with a total capacity of 54.65 tonnes per day (TPD) by March 31, 2024.
HPCL serves millions across a large socio-economic spectrum in India through a wide range of products and services. In tandem with the extensive scale of existing operations, the company has made investments to develop new products, establish new facilities and modernise the existing infrastructure. HPCL’s renewable energy portfolio has reached a total capacity of 208 MW. A total of 17,618 HPCL retail outlets have been solarized.
| India’s petrochemical production (‘000 tonnes) |
| Categories | FY 2022-23 | FY 2021-22 | Variations (%) |
| Synthetic fibre | 4,006.38 | 4,040.01 | (-)0.83 |
| Fibre intermediate | 4,988.03 | 5,481.67 | (-)9.01 |
| Polymers | 11,486.62 | 12,470.65 | (-)7.89 |
| Synthetic rubber | 344.86 | 382.63 | (-)9.87 |
| Synthetic detergent intermediates | 703.02 | 780.39 | (-)9.91 |
| Performance plastics | 1,960.16 | 1,697.68 | 15.46 |
| Olefins total | 11,296.05 | 12,527.02 | (-)9.83 |
Source: Department of Chemicals and Petrochemicals, Government of India
Robust long-term demandIndia’s petrochemical demand is projected to rise by 7.5 percent, reaching a record high in the current financial year 2023-24. This growth is attributed to the forecast of robust economic growth fuelled by the government’s massive infrastructure spending and the resurgence of post-pandemic consumer activities. After contracting in the financial year 2020-21 due to pandemic-related disruptions in factories and trade, India’s petrochemical consumption rebounded and outpaced the growth of the gross domestic product (GDP).
According to a report compiled by the apex industry body, the Chemicals and Petrochemicals Association of India (CPAI), India’s petrochemical demand is expected to reach 57 million tonnes per annum (MTPA) in the financial year 2023-24, compared to 53 MTPA reported in the previous financial year. In the financial year 2024-25, India’s petrochemical demand is forecasted to remain at 61 MTPA. This growth projection signifies an increase in the consumption of petrochemical value chains in the future and a healthy growth rate for the industry.
Except for a significant contraction in the financial year 2020-21 due to a slowdown in industrial activities, the overall demand for India’s petrochemicals and raw materials has consistently surpassed the country’s economic growth. According to the recently released report titled ‘Indian Petrochemical Industry 2023’, India’s petrochemical demand declined by 8.5 percent to 43 MTPA in the financial year 2020-21, compared to 47 MTPA in the previous year.
Following the de-growth, India’s petrochemical demand gained momentum in the financial year 2021-22, driven by an overall economic recovery and a resurgence in factory activity. As the pandemic’s impact subsided, primary petrochemical and derivative resumed their business activities, coinciding with the recovery in consumer demand. Since then, India’s petrochemical demand for gas consistently surpassed the growth of the country’s economic growth.
DILIP KUMAR JHA
Editor
dilip.jha@polymerupdate.com
