Bharat Petroleum to start work on Rs 5,000-crore petrochem facility in Kochi

State-run oil refiner Bharat Petroleum Corporation (BPCL) is all set to start work on the petrochemicals complex in Kochi with all green clearances in place and securing a Rs 4,000-crore loan commitment from State Bank of India.

"We have all the permissions in place from the Union environmental ministry and other regulatory authorities for the Rs 5,000-crore petrochemicals complex in Kochi. We hope to resume work and complete it as per schedule in 2018," BPCL chairman and managing director S Varadarajan has said.

The chairman also said the Kochi petchem project is part of the Rs 1 lakh crore planned capex for the next five years, out of which Rs 40,000 crore will be spent on refining capacity addition alone.

Finance Director P Balasubramanian said that the company has secured a Rs 4,000-crore loan commitment from State Bank of India for the project.

"We will draw the money as when we begin the work," he said, adding though the loan is not strictly tied to this project alone.

The Rs 5,000-crore Kochi petrochemiclas project, announced in December 2011 as part of a Rs 20,000-crore expansion of the Kochi Refinery, will help the country end its dependence on imports of speciality propylene derivatives- based products such as acrylic acids and acrylates used in plastics, paints, coatings, adhesives, inks and textiles, the company claimed.

But the project suffered a big set back after the Korean chemicals major LG Chem walked out of the JV in August 2013 citing adverse international environment for large investments.

BPCL and LG Chem had signed an agreement in July 2012 to set up a SAP specialty chemicals plant in Kochi.

Following this BPCL tried in vain to buy outright the critical technology to make speciality propylene derivatives and SAP (super absorbant polymers), as there are only five companies in the world which have this technology.

The third largest oil marketer and refiner has said they are still in talks with all the players and hope to complete a JV agreement at the earliest, adding a delay on this front will not affect the overall work on the project.

The upcoming petchem facility, adjacent to its Kochi refinery, once completed will produce 250 million tonne speciality propylene derivative products, which are fully imported now.

The petchem project is part of the over Rs 20,000-crore expansion BPCL is undertaking to upgrade and increase its refining capacity from 9.5 million tonne to 15.5 million tonne. The expansion is alone will cost the Rs 16,500 crore and is expected to be completed by December 2015.

The Kochi refinery currently produces petrochemical feed stocks such as benzene, toluene and propylene.

Post-expansion and technology upgrade, it will be able to process Euro V petrol and diesel.

BPCL currently has four refineries-- in Mumbai, Kochi, Bina in MP and Numaligarh in Assam.

Last week, BPCL announced a massive expansion of its refinning capacity to 50 mt from 30 mt at an investment of Rs 40,000 crore over the next five years as part of its planned Rs 1 lakh crore cpaex under Project Sankalp.

Out of the Rs 1 lakh crore capex, it will spend Rs 25,000 crore in upstream development, including developing its Brazilian and Mozambique oil and gas fields and buying more oil equity abroad and the remaining amount will be pumped into marketing spends and other developmental activities.

Refinery expansion will the Kochi capacity rising to 15 million from the present 9 million tonne, that of Bina to 15 million tonne from 6 million tonn, a threefold rise in the throughout levels from the Numaligarh refinery in Assam to 9 million tonne.