India’s Brahmaputra cracker project to yield lower-than-planned C2

21 August 2013 07:34  [Source: ICIS news]

KOLKATA (ICIS)--India’s Brahmaputra Cracker and Polymers Ltd is expected to yield lower ethylene (C2) output than the 220,000 tonne/year initially planned, owing to faulty conception and shortage of natural gas feedstock, a government official said on Wednesday, citing a government audit report on the project.

“Pre-project planning, including feasibility report were faulty when project work started in 2007. The rated capacity of 220,000 tonne/year was sub-optimal by current standards, the official from India’s Ministry of Chemicals and Fertilizer said

“Even the sub-optimal ethylene production capacity would not be achieved given the natural gas availability, and best production would not exceed 190,000 tonne/year,” the official said.

The project was conceived way back in 1989 and work commenced 18 years later in 2007. BPCL did not change the project parameters even though the minimum economic size of most basically configured petrochemical plants had changed to 300,000 tonnes/year.

Construction of the Brahmaputra petrochemical project at Lepetkata in northeastern India is now 80% complete, with actual investments totaling $952m (714m) as of January 2013, including $584m received from the government as capital subsidy, as the project cost has increased over the years, the official said.

Project start-up is not expected in December 2013 as originally set, but no definite schedule has been finalised, the official said.

The petrochemical project in Assam province is being implemented by BCPL, whose principal promoters were GAIL India Limited (70%), Oil India Limited (10%), Numaligarh Refinery Limited (NRL)  (10%) and Assam Government (10%).

Natural gas linkages had been established with wells operated by ONGC Ltd and Oil India Ltd in northeastern India, but quantum assured and available would not be sufficient to achieve the rated ethylene capacity of 220,000 tonnes/year, the ministry official said.

Even the price of natural gas feedstock supplies were assumed at lower than current market rates, and the points raised by in the government audit report would have to be replied by the ministry within the next two months, he said.

Any change in the configuration of the Brahmaputra petrochemical project, however, is unlikely as costs have increased by $700m from the initial estimate to $1.79bn,  the official said.

($1 = €0.75)

Author: Ajoy K Das

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