Chemical Renaissance via Refining

Dr. Partha Maitra

Mumbai 14th + 15th November 2019

Disclaimer

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Any statement, opinion, prediction, comment, or observation made in this presentation/publication are those of the presenter/author only and in no condition should be construed necessarily representing the policy and intent of Reliance Industries Ltd. (RIL). The information presented herein are of the presenter/author’s own and in no way RIL attracts any liability for any inconsistency or irregularity in terms of the accuracy completeness, veracity, or truth of the content of the presentation/publication. In addition, RIL shall not be liable for any copyright infringement and misrepresentation for the presented content as the content is presumed in good faith to be a creation of presenter’s/author’s own mind. The scope of this presentation/publication is strictly for knowledge sharing purposes and not necessarily to provide any advice or recommendation to the audience/readers. Any endorsement, recommendation, suggestion, or advice made by the presenter/author shall be in his personal capacity and not in professional capacity as an employee of RIL. Any person acting on such endorsement, recommendation, suggestion, or advice will himself/herself be responsible for any injury/damage. Some images in this presentation are taken from internet and presenter doesn’t claim any copy right for such images. The ownership of these images lies with respective owners.

© Reliance Industries Ltd.

Index

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● Indian chemical industry

− Demand

− Supply

− Fuel vs chemical

● Indian chemical renaissance

− Fundamentals

− Feedstock

− Integration

− Products

● Conclusion

Indian chemical industry

Good demand vs poor supply

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Demand : An oasis of opportunities

: Demand growth magnet

Supply : A desert of production

: Inadequate domestic supply

: Rising + unsustainable imports

Action : Focus to increase supply

: Unlock feedstock constraints

: Tap refinery for chemical feedstock

: Rectify chemical supply-demand imbalance

: Minimize chemical imports

: Usher in a Chemical Renaissance in India

Chemical demand

India = Bullish for chemicals

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Demand : Very low per capita consumption

: Polymer = India @11 vs @28kg global

: Large upside potential in chemical demand

Growth : Higher than GDP growth

: India = World GDP growth leader

: Polymer = CAGR ~ 9% last 5 years

: Polyester = CAGR ~6% last 5 years

: Sustained demand growth engine

Drivers : Urbanization

- ~200mm shift to cities by 2035

: Higher standard of living

- ~250mm new consumers by 2030

: Consumer driven economy

- ~ $5 trillion by 2025

Chemical supply

India = Needs a booster dose of chemicals like China

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Chemical, mmt/yr India China %

Building blocks

C2= 7.5 25.6 29

C3= 6.3 34.9 18

BD 0.5 3.8 13

PX 5.6 12.5 45

Benzene 2.6 15.4 17

Sub-total 22.5 92.2 24

Polymers

PE 5.7 18.8 30

PP 5.2 26.4 20

PVC 1.6 24.1 7

Sub-total 12.5 69.3 18

Polyester / PET 9.25 54.0 17

Supply : Major constraint in chemical building block

: Low commodity polymer

: Major gap in PVC, the frugal polymer

: Absent in high-end polymers

: Absent in specialty chemicals

Imports : >35% of total demand

: Increase from ~27% in last 5 years

: Unsustainable + regressing

: Urgency for Make-in-India in chemicals

: Suppress latent demand + GDP

: Depress employment potential Source: IHS-Markit

Refining : Fuels vs chemicals

Refining transformation towards Crude-to-Chemical

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Refining Fuels Chemicals

Supply-demand balance Surplus Deficit

Demand growth X 3X

Trade Exports Large imports

Product Commodity Differentiated

Prices Low High

Margins Low High to very high

Risk Mobility revolution Circular economy

Demand peak Yes No

Demand decline Yes No

Business Energy Materials

Chemical : Fundamentals

Ensure top quartile competitiveness in chemical

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Feedstock : Identify feedstock via molecule management

: Minimize feedstock cost

Size : Economies of scale to minimize capex

: World scale plants

: Competitive conversion cost

Technology : Minimize cost of production

: Explore manufacturing JV

Integration : Adopt the “verbund” concept of total integration

: Horizontal integration with refinery

: Vertical integration with product derivatives

Product : Customize for Indian requirements

: Frugal + fit-for-purpose in India

: Explore marketing JV

Chemical : Feedstock

Refinery can drive the Indian Chemical Renaissance

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Refinery : A fountain head of chemical feedstock

Principles : Identify low value intermediate streams as feedstock

: Perform molecule management to optimize chemical feed

: Maximize feed access + minimize logistic costs

: Integrate H2 + utility transfers

: Utilize surplus H2 from chemical in refinery

: Optimize stream transfers between refinery + chemicals

: Blend chemical return streams in refinery fuel pool

: Ensure feedstock flexibility to chemicals

Refinery – Chemical Integration

Eliminate chemical imports 10

Molecule Management

C2 + C4 : Steam cracking to olefins, primarily C2=

C3 : PDH to C3=

Naphtha : Stop internal use for cogen fuel + H2 in refineries

: No naphtha sales

: Import LNG + LPG to unlock the naphtha potential

Light naphtha : Separate normal + iso-paraffins

: Max olefins from n-paraffin via steam cracking

: Gasoline co-product from i-paraffin

Heavy naphtha : Max aromatics via catalytic reforming

Heavies : Eliminate fuel oil sales via hydrocracking + SDA

: Maximize conversion to naphtha + LPG for chemicals

H2 : Optimize H2 between refinery + chemical

: Competitive H2 from SDA pitch

SDA = Solvent de-asphalting; PDH = Propane de-hydrogenation

Target >12.5% chemical building blocks from Indian refineries

Products

Plastic : Material of choice for the next generation

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Circular economy : No single use plastic

: Target plastic waste for recycling

: Mix of prime + recycled plastic

: Responsible + sustainable use of plastic

Customize for India : Substitute metals + wood

: Light weight for transportation

: Irrigation + water piping for agriculture

: Home furniture + furnishing for urbanization

: White goods for the consumer society

Value chain : Customize plastic application

: Elevate from commodity plastic

: Target engineering plastic to match alternative

: Target performance plastic to beat alternative

The plastic waste problem

Eliminate plastic waste for societal benefit

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Disposition % Remarks

Recycle 10 Maximize for future

Loss 4 Processing

Landfill 40 Temporary solution

Incinerate 14 Plastic waste-as-fuel

Leakage 32 Plastic waste problem

Total 100

● Plastic waste problem ● Plastic waste solution

Recycling Product

Mechanical : Alternate usage

: Road building

Physical : Low grade usage

: Bottles to pillows

Chemical : Drop-in monomer

: PE to PE

● Eliminate leakage

● Minimize landfill + incinerator

● Maximize recycle for a circular economy

● Research bio-degradable plastic

Source: UN

Plastic Billion t

Virgin 8.3

Long term use 2.5

Waste 5.8

Land fill 4.6

Incineration 0.7

Recycle 0.5 Source: UN

Conclusion

Chemical Renaissance via Refining

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● Boost supply of chemicals in India

● Respond to the threat of mega crude-to-chemical complex in China

● Refinery = Cradle for India’s chemical boom

● Maximize refinery-chemical synergy

● Promote circular chemical economy

● Chemical = Material of choice for the future

Thank-you

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