By Ben DuBose
NEW DELHI -- Integration throughout the
downstream value chain is essential if global players want to
compete with future US facilities, according to Dr. Ajit
Sapre, head of research and technology for private Indian refiner Reliance
delivered the keynote address Thursday at the International Refining and Petrochemical Conference (IRPC),
referred to shale gas as a game changer in North
America, noting that the advantage of cheap ethane feedstock appears unlikely to change
As a result, for companies such as Reliance that hope to
compete on the global scene, it is critical to integrate
An integrated approach provides synergies and gives
the ability to hedge the market risk, Dr. Sapre said.
Dr. Sapre noted that profitability cycles for petrochemical
plants and refineries are often different. For example, the petrochemicals cycle of
profitability repeats every seven to 10 years, he said.
Operating rates and profits are high when supply meets
demand, Dr. Sapre said. Additional capacity buildup
then leads to lower operating rates and margins drop. That is,
until supply meets demand, and everyone wants to build new
On the other hand, refinery profitability depends on
crude oil prices, giving it a differently-timed cycle.
Since the cycles are generally out of sync, the
integration of refining and petrochemicals adds profitability
and stability to your business, Dr. Sapre said.
Future ethane-based US facilities will use feedstock from an adjacent refinery
for three units, he explained: a steam cracker, an aromatics
complex and a gasification syngas plant, he explained. Then,
the syngas plant provides fuel oil and fuel gas for the
For non-US producers, there are several potential
integration types to consider. The first is process
integration, which means innovative designs of downstream
petrochemical plants. The second is utility integration, which includes heat,
hydrogen, water, steam and electricity. The third and final is
the treatment of fuel gas, such as utilizing the hydrogen and
hydrocarbons present in fuel gas petrochemical feedstock.
By region, the Middle East is the best positioned to execute
that plan based on its newer facilities, Dr. Sapre said.
Meanwhile, Western Europe sites, which are more specialized,
could struggle the most.
The integrated approach provides synergies and gives
the ability to hedge market risk, he said. The
Middle East is clearly the most advantaged based on feedstock,
while Western Europe probably the least. Leaders in the
industry need to survive through the market cycles.
Low-cost importers and integrated players will run
hard, while specialized companies are more likely subject to
shocks, he added.
One strategy is to co-locate facilities at major hubs, he
explained, with one example being Singapores Jurong
Island. Key companies there include BASF, BP, Celanese, EM,
DuPont, Mitsui Chemicals, Chevron Oronite, Shell and Sumitomo
By co-locating, companies can save as much as 15% on
logistics costs, Dr. Sapre said.
Another international facility that could thrive in the new
era is Reliances Jamnagar super site in India, which is the worlds
largest refinery, he said.
Referring to Jamnagar as the crown jewel of his
companys portfolio, he noted that it has two of the
largest fluid catalytic crackers (FCCs) in the world, which
provide cheap feedstock for petrochemicals.
The offgas gives feed for a gas cracker, naphtha offers feed
to the aromatics complex, propylene supplies feed for a
polypropylene plant, and a mix of C4s serves as feed for the
Given demand, FCCs are becoming more and more a
machine to make downstream products than for gasoline, he
Reliance is also undertaking a massive refinery petcoke
gasification project at Jamnagar, seeking an even
Were on path to become a bottomless and
ultra-clean refinery, he said. Its the
largest petcoke gasification project in the world.
The project is driven by a desire for
energy self-sufficiency, he said, with syngas competitive with
As other panelists explained this week, the
US ethane advantage is making it tougher for international
companies such as Reliance to compete on the global scene. Dr.
Sapre seemed to concur with that assessment, predicting the US
to become a major petrochemical exporter in the coming
However, the Reliance executive is confident that his
companys integration strategy will keep it
We own and operate the worlds largest refinery complex [at
Jamnagar], he said. We have a top 10 global ranking
[in integration]. Were moving from
a regional to a global leader.
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