RIL invests $12 billion for petrochemicals expansion

MUMBAI, INDIA: Reliance Industries Ltd (RIL) will expand its petrochemicals businesses as it bets Indian demand for materials used to make plastics and polyester will help offset weak global fuel sales. The company will spend $8 billion to boost capacity and $4 billion on a plant to make a combustible gas for powering its refineries and petrochemical factories in western India. The outlay will be its highest since completing its second refinery in 2008.

Reliance wants to use its record 702.5 billion rupees ($13.5 billion) cash to reverse a 29 per cent slump in its stock in the past year after a slowdown in China’s economy and Europe’s debt crisis cut fuel demand, adding to the drag on earnings from lower production at India’s biggest natural gas field. Reliance estimates India’s economic growth will spur a 54 per cent increase in chemicals in the next five years.

The expansion to 18,154 kilotonne a year would account for about 55 per cent of India’s estimated petrochemicals demand in the year ending March 2016. Reliance also plans to build a plant that will turn petroleum coke, an oil byproduct produced at the refinery’s coker unit, into synthesis gas, which is cheaper than imported liquefied natural gas. Using synthesis gas, or syngas, will reduce cost of refining and add about $3 a barrel to the company’s refining margins.

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