IOC plans feasibility study on $200m SBR project

31 July 2008 09:26  [Source: ICIS news]

MUMBAI (ICIS news)--Indian Oil Corp (IOC) will soon start a detailed feasibility study on a rupees (Rs) 8-9bn ($188.2-211.8m) joint venture styrene butadiene rubber (SBR) unit downstream of its cracker project in Panipat, Haryana, said a company source on Thursday.


“We plan to execute a heads of agreement with two joint-venture partners by end- August and simultaneously start the study for a 120,000 tonnes/year SBR plant. The project is planned for completion at end-2011 or early 2012,” the source added.


The source declined to name the joint-venture partners but said that one of the companies would supply technology for the project, while the second, an international trading company, would offtake product for exports.


“About 20-25% of the production is likely to be exported,” he said.


Final investment clearance from the company’s board is expected after the completion of the study, said the source.


The economics of the project looked good and IOC was likely to go ahead with it despite the recent financial crunch, said the source.


“If the SBR project is implemented on a 1:1 debt equity ratio, IOC’s stake would only be Rs2bn,” the source said.


Feedstock butadiene would come from a 138,000 tonne/year plant downstream of the 857,000 tonne/year Panipat cracker, said the source.


About 75,000 tonnes/year of butadiene would be needed for the SBR plant and IOC would initially produce this volume and offer it to the joint venture on a transfer pricing basis, he said.


To utilise the surplus butadiene IOC was also looking at polybutadiene rubber (PBR) production at Panipat, he said.


India currently imports about 60,000 tonnes/year of PBR and there is room for a new plant. PBR technology is also available on a third party transfer basis. But if we do not proceed with PBR we can enhance the capacity of the SBR plant,” he added.


ICIS news had earlier reported that IOC was mulling various C4 and C5 derivatives to improve the viability of the Panipat naphtha cracker project.


IOC’s Panipat cracker was planned for completion by end-2009, said the source.


IOC’s finances are currently under pressure with its key refining business losing money as prices of refined products, which are state controlled, have not increased in line with crude oil prices. This has affected some of the company’s planned projects.


Earlier this month, IOC had said that it would postpone paraxylene and other petrochemical projects that were part of a planned refinery and petrochemical complex in Paradip on the east coast of India.


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By: Malini Hariharan
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