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Conditions ideal for OPaL launch: Makarand Dixit

Almost three years after its first scheduled commissioning date, ONGC Petro additions Limited (OPaL) — the multi-billion dollar joint enterprise promoted by Oil and Natural Gas Corporation (ONGC) and co-promoted by GAIL (India) Ltd and Gujarat State Petroleum Corporation (GSPC) — appears to be set to commission its mega petrochemical complex. The OPaL complex located in Special Economic Zone (SEZ) of the port city of Dahej in Gujarat houses the country's largest dual feed cracker unit (DFCU), which has a capacity to produce 1.1 million MT/year of ethylene and 400,000 MT/year of propylene. The complex also houses two 360,000 MT/year high-density polyethylene/linear low-density polyethylene (HDPE/LLDPE) swing units, and HDPE and polypropylene (PP) units having capacities of 340,000 MT/year each. Other associated units include a Pyrolysis Gasoline Hydrogenation Unit, Butadiene Extraction Unit and Benzene Extraction Unit. After start-up, OPaL will be able to gradually ramp up its production to 1.1 million MT/year of PE, 340,000 MT/year of PP, 150,000 MT/year of benzene, 115,000 MT/year of butadiene and 165,000 MT/year of pyrolysis gasoline.

The OPaL Petrochemical Complex - Photo Courtesy: OPaL

OPaL is envisaged to become a leading petrochemical supplier in India and help meet the rising demand for petrochemical products, particularly PE and PP, in the country. The complex will also boost employment in the country, generating about 1,000 permanent and 15,000 direct and indirect jobs. In an exclusive interview with Lekhraj Ghai of POLYMERUPDATE, Mr. Makarand Dixit, Head Marketing – OPaL, addresses queries and concerns pertaining to the mega petrochemical project.

Interview of Makarand Dixit (MD) with Lekhraj Ghai (LG):

LG: How soon can we expect commercial operations to begin at the OPaL complex?

MD: Apart from a few utilities and offside packages, all units of the OPaL complex are complete and pre-commissioning activities have already begun. Commercial operations are expected to start by June-July 2015.

LG: Is the pipeline framework for feedstock supply from ONGC's units in Dahej, Uran and Hazira complete?

MD: Yes. The gas and water pipelines are complete. Gas and naphtha will be sourced from ONGC, our parent company.

LG: Considering that feedstock for the OPaL cracker will be domestically sourced from ONGC itself, is the delay in the commencement of production from the cracker likely to impact the cost-competitiveness of ethylene and propylene, and therefore of downstream polymers?

MD: The cracker is already complete. Construction of the cracker finished almost a year ago. However, the delay in the start-up of the project is due to slow work done by the contractor who was entrusted with the task of the construction of the utilities and offside packages.
At the moment, the falling naphtha prices have resulted in a drop in propylene prices and the price ratio between propylene and PP has become highly attractive, and ideally OPaL should have entered the market by now. Indeed, there have been some delays but I am confident that the project will be commissioned on schedule in June-July 2015.

LG: Will the OPaL 340,000 MT/year PP plant face competition from MRPL's 440,000 MT/year PP plant, which is also expected to start-up soon?

MD: MRPL's PP plant was scheduled to start-up in December 2014. However, it does not seem that the plant will be able to start-up any time before mid-2015, which is when OPaL will also commence production. However, the coincidence of both plants starting up together will not have much impact on the PP market. MRPL will essentially produce PP homopolymer, which is a typical grade of PP, and will cater to the market in the southern part of India. MRPL's PP plant will surely enjoy the advantage of being the only plant in South India. OPaL, on the other hand, will produce PP of all grades, such as PP homopolymer, impact copolymer and random copolymer, and will cater mostly to the market in the northern and western parts of India apart from catering to overseas markets.

LG: What will be the market scenario then?

MD: Naturally, there will be segregation of the northern and southern markets. As of now, PP demand from the south is predominantly met by RIL's plants in Gujarat and from IOC's plant in Panipat, Haryana. Prices of polymers across the world are essentially the same. It is the freight and how efficiently the product is delivered to customers, which is of essence. If MRPL is able to come up with appropriate grades for that particular region then it will be able to fill most of the quantity in that region only and will not have a impact on OPaL's potential market.

LG: When is the water-desalination plant at Dahej, which will supply raw water for the OPaL project, expected to start-up? Which company is entrusted with the construction of the water-desalination plant? Has the delay in the start-up of the water-desalination plant resulted in the delay in the start-up of the entire project?

MD: The water desalination plant will definitely come up, but at a later stage. As of now, we will be sourcing the project's water requirements from the Government of Gujarat. The project is entrusted to a Japan-based consortium. Nevertheless, it is not that the start-up of OPaL depends on the completion of the water desalination plant.

LG: Reports indicate that BHEL has been entrusted with the task of building a captive power plant for the project. What is the status of this plant? Is it ready? If not, when can the power plant be expected to start operations? There are reports about MRPL blaming BHEL for the delay in the commissioning of their expansion project and PP plant. Is that the case with OPaL too?

MD: In our case, the BHEL captive power project (CPP) has been satisfactory. The CPP has partially started with 2 gas turbines (GTs) and boilers ready for augmenting pre-commissioning activities. The completion is expected very soon well before June 2015.

LG: : Have talks between OPaL and KPC regarding strategic partnership been finalized? How much stake has been offered to KPC? What other role will KPC play in the project? Will KPC be involved in marketing of the products?

MD: Talks are ongoing with several companies but have not yet reached a level that something substantial can be declared.

LG: What impact will the OPaL project, that houses the country's largest dual feed cracker, have on the PE market across India?

MD: As of now, India imports about 1.3 million MT of polyethylene. OPaL is soon coming up with 1.1 million MT of PE. At the same time, RIL is coming up with 500,000 MT while GAIL will add another 400,000 MT of PE. Even after all the three planned capacities come online, there will still be space for the three to mutually coexist. Also to be considered is the rate at which polymer consumption is growing in the country, which is about 12 to 14 per cent per annum. At this rate, by 2018, India will again become a net importer of PE. LG: Please share with us your experience at Plastindia 2015.

MD: Being accustomed to Plastindia at New Delhi, I was a little skeptical when the event was moved to Gandhinagar. However, considering that almost half of the country's polymer consumption comes from the states of Gujarat and Maharashtra and after experiencing the facilities on offer, I believe that Plastindia is here to stay. We used the opportunity presented by this year's Plastindia to launch the brand names for our products and to announce the specific grades that will be manufactured by us. Our brand names are OPaLene HDPE, OPaLene LLDPE and OPaLene PP. Thus, we can now use a more specific approach towards our customers, most of whom are eagerly anticipating the project's commissioning for supply to commence.

Mr. Makarand Dixit joined OPaL in August 2008 and has more than 20 years of experience in the petrochemicals business. He has worked and shouldered responsibility in the petrochemicals business and is exposed to all facets of the business, from getting finance for the project to the launching of polymers in the domestic and international markets.

His career started in 1989 in Oswal Petrochemicals before moving onto Reliance industries in 1990. He rose to become General Manager-Marketing in 2006. After which, he worked with Indorama's Nigerian acquisition "Eleme Petrochemicals" as a head of Marketing before taking up his current assignment in OPaL.

Mr. Makarand Dixit is a postgraduate of Organic Chemistry from Pune University and has done his MBA from Symbiosis Institute of Business Management with Marketing as a specialization. His globetrotting past and ardent book reading has exposed him to various cultures which he beneficially uses in his work and daily life. An avid sports lover - his commitment to team and team work comes straight from the cricket field as he has represented Maharashtra in Ranji Trophy for more than 5 years.

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