04 October 2013 09:38 [Source: ICB]
As its joint venture partner South Korea-based LG Chem backs out, the company will proceed on its own
Bharat Petrochemicals Corp Ltd (BPCL) will proceed with a plan to build an $800m (€592m) petrochemical complex at Kochi in southern India, despite the decision of its joint venture partner – LG Chem of South Korea – to back out of the project, a BPCL official said on 24 September.
“LG Chem is not keen on the joint venture project anymore, but BPCL is certainly not scrapping it,” the company official said. “BPCL is considering all options – scout for a new partner or implement it ourselves, [and] source technology through a licensing agreement with global petrochemical majors.”
The project initially proposed with LG Chem involves the building of a fluid catalytic cracker, which is expected to produce 500,000 tonnes/year of propylene, near BPCL’s refinery in Kochi.
The downstream project is tied to the completion of a planned $2.3bn expansion of BPCL’s refinery – to raise its capacity to 15.5m tonnes/year from 9.5m tonnes/year – 42 months from 23 September this year, the official said.
“The downstream project was very much on [the] cards without risks of time and costs overruns,” the BPCL official said.
The company signed a memorandum of understanding (MoU) with LG Chem in July 2012 regarding the downstream project. But as early as April this year, LG Chem had aired some misgivings about the project, prompting BPCL to draw up independent petrochemicals project that will be linked to its Kochi refinery, the official said.
LG Chem decided to withdraw from the joint venture because of the weakened state of the global economy, a spokesperson said on 25 September.
“It is not a sudden decision,” the spokesperson said. “We have thought about the business thoroughly and have decided to completely withdraw [from the project] due to the ongoing global economic recession.”
OTHER DEALS IN WORKS
BPCL has been exploring potential partnership with Manali Petrochemicals for a polyurethane plant, and with ONGC for polypropylene (PP) derivative facilities, he said.
It has also reached out with the only five global companies with proprietary propylene derivates technology, for a possible licensing agreement for the Kochi petrochemical project, the BPCL official said.
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