Nayara Energy to invest $8 Billion in Petrochemical Expansion Project
Rosneft-backed Nayara Energy is planning to invest ₹68,000 crore ($8 billion) to establish a 1.5 million tonne per annum (mtpa) ethane cracker at its 20 mtpa refinery in Vadinar, Gujarat. This significant investment marks the first major commitment by a foreign company in India’s petrochemical sector. Nayara has already initiated the front-end engineering work for this ambitious petrochemical project, as confirmed by a senior industry executive.
Despite attempts to reach out for comments, Nayara Energy did not respond to queries. However, the company stated in its FY24 annual report that it strategically adopted a phased approach to asset development in 2018 to venture into the petrochemicals industry. Nayara is well-positioned to emerge as a prominent player in the petrochemical sector due to its unique advantages, including integration opportunities with the refinery, proximity to the port, and the strategic location of the refinery in western India, which is the country’s largest petrochemical consumption region.
Over the past year, several major Indian companies such as Gail India, Indian Oil Corp, and Bharat Petroleum Corp have announced investments exceeding ₹1.5 lakh crore to expand their petrochemical operations. Additionally, Adani Enterprises’ subsidiary, Adani Petrochemicals, recently formed an equal joint venture with Thailand’s Indorama Resources to enter the refinery, petrochemical, and chemical business.
India’s petrochemical capacity is forecasted to increase to 46 million tonnes by 2030 from the current 29.62 million tonnes, according to the Ministry of Petroleum and Natural Gas. An ethane cracker is a crucial facility that breaks down hydrocarbons, a component of natural gas, into ethylene, a key chemical used in the production of plastics, adhesives, and synthetic rubber, among other petrochemicals. While petrochemical companies traditionally relied on naphtha as the primary feedstock
Reliance Industries imports 1.6 million metric tons per annum (mtpa) of ethane for its ethane crackers located in Dahej and Hazira in Gujarat, as well as Nagothane in Maharashtra.
In a significant development last year, state-run Gail India unveiled plans to establish a 1.5 mtpa ethane cracker project in Ashta, Madhya Pradesh, with a product range encompassing various ethylene derivatives, requiring an investment of ₹60,000 crore. Additionally, state-owned refiner Bharat Petroleum is committing close to $6 billion to construct an ethane-fed cracker at its Bina refinery in Madhya Pradesh, which processes 156,000 barrels per day.
Nayara Energy operates India’s second-largest single-location refinery in Vadinar, boasting a capacity of 20 mtpa. Following the acquisition of Essar Oil by a Rosneft-led consortium for $12.9 billion in 2017, the company was rebranded as Nayara Energy. Nayara is currently expanding its capacity to strengthen its foothold in the petrochemical and alternative energy sectors, having already established a polypropylene unit at Vadinar.
According to sources familiar with Nayara’s strategy, the company, like other refiners, is focused on diversifying its product portfolio to establish a prominent presence in the rapidly growing petrochemical industry. These expansions are aimed at meeting the increasing petrochemical demand in both domestic and international markets.
The Indian government, in collaboration with public sector undertakings (PSUs) such as ONGC and BPCL, as well as private entities like Haldia Petrochemicals, is contemplating investments totaling nearly $45 billion in the petrochemical sector. India currently relies on imports for 45% of the petrochemical intermediates it requires. The demand for chemicals is anticipated to triple, with India’s petrochemical industry projected to reach $1 trillion by 2040.
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