India’s biggest oil refiner is betting on plastics as it seeks to diversify from an increasingly challenging fuels business.
Indian Oil Corp. plans to add petrochemical plants to all of its future refinery expansions and boost existing output at its current facilities, Chairman Shrikant Madhav Vaidya said. Overall, less than 10% of the crude processed by the refiner is used to make petrochemicals — the building blocks for everything from food packaging to car parts — but the business contributes almost a quarter of the company’s profits, he added.
While there is consumer and government pressure across the world to reduce the use of plastics, processors in Asia are building or planning petrochemical plants with demand for transport fuels set to ease in the years ahead. Indian Oil this week finalized a $2.4 billion expansion at its Gujarat refinery to include a polypropylene unit, which can make products for packaging and textiles.
“We realized that the volatility of the fuel market can be easily controlled by having a good footprint in the petrochemicals sector,” Vaidya said in an interview.