LNG - User's Conference

LNG  - User's Conference -organised by Chemical Industries Association (India) on 20th July 2012 

Excerpts from the Welcome Address by the President - P.K.N.Panicker  

 As I stand before you, I am reminded of the days, almost 3 decades back, when this Association was advocating the establishment of a merchant Naphtha Cracker in Tamilnadu, An Ethylene handling facility at the Ennore Port, Laying of Petroleum product pipelines connecting major towns in Tamilnadu and extending to Kochi and a Southern Gas Grid. Things did not happen the way we wished and Tamilnadu, because of wrong policy decisions, lost the advantage of having established many pioneering chemical manufacturing facilities in the early days, a foundation on which the state and perhaps the south as a whole could have built a flourishing chemical and bulk drug sector. Growth of the chemical sector in the state and perhaps in the whole of south got stalled and continues to be a story of missed opportunities; and the story repeats again and again - not in Tamilnadu alone but in the whole country. Even so we can be happy and proud that this country has a wonderful capacity to sustain; go along in spite of everything that goes wrong time and again.

It was only a couple of weeks back that the PCPIR (Petroleum Chemicals and Petrochemicals Investment Region) project in Tamilnadu obtained Cabinet nod. This, without doubt, is welcome news. The six million tons per annum refinery project (to be expanded to 9 m.tons) of Nagarjuna Oil Corporation jointly with TIDCO at a total cost of Rs.9,600.crores will form part of the PCPIR. NOCL plans to set up facilities for production of xylene, PTA and recovery of propylene.The total investment planned in the PCPIR is Rs.92,160.crores. Another project slated to be part of this PCPIR is the integrated 15 million tons per annum refinery cum petrochemical complex of CPCL. It will have a grass root refinery along with an ethylene cracker and down stream units for aromatic derivatives and paraxylene with an envisaged of Rs.40,000. Crores. 

LNG import terminal at Ennore Port by Indian Oil Corporation Ltd with storage and regasification facilities of 5million tpa capacity, according to the company's Chairman, Mr R.S. Butola, is estimated to cost 4,320 crore. TIDCO partners this project.  In addition,  The Indian Oil Petronas Pvt. Ltd is setting up an LPG import-export terminal at Ennore Port with tankage capacity of 30,600 tonnes to be completed by March 2016 and the LPG terminal by August 2012 is estimated to cost 498 crore.  These projects together with the LNG terminal at Kochi can redraw the face of the Chemical Industry sector in Southern India - and the Energy sector too. We welcome these developments and this seminar with this backdrop is organised to have a frank exchange of views among technologists and potential stake holders as to how the newly created facilities can be best used.   

We are really overwhelmed by the response from leading corporate houses involved in the field – more than 30 distinguished delegates representing almost all leading stake holders.    

This country, based on a conventional understanding, is highly deficit in energy resources; Any meaningful improvement in the material living standards of our people is possible only with substantial increase in power generation. Our per capita power consumption is just around 780 units per annum in comparison with 1200 in SriLanka, 2230 in Brazil, 2470 in China 13000 in USA and even more in other developed countries.  Social inclusion is possible only when the tediousness of manual jobs is reduced. Let us not take the freebie culture  ushered in by the political leadership in the country lightly. It has a social message that can be understood if we remember that the free country of which Poet Subramaniya Bharati dreamed had grinding machines and washing machines as essential components in it. And this is what made Bill gates tell that poverty is, more a social mind set than economic.  This is what makes increased power generation highly relevant. Naturally we have to look at all possible resources within the country and even outside. Thorium based nuclear energy is one such and being actively advocated by our former President Dr. Abdulkalam. Solar, wind, Bio including Algae are potential candidates but the gestation period to make them really viable and dependable is going to be long. The other resource that we can immediately look at is Natural gas. Though our own finds are not that great to give us comfort, resources elsewhere is large enough to give us hope, subject to our being able to evolve the correct strategies and relationship with other countries rich in Natural gas.  

Look at what is happening in the United States.  The whole nation seems to be celebrating the rich shale gas find, and is optimistic and enthusiastic about a rebound of their otherwise  battered economy. With economical shale gas development in the oil and gas industries  U.S. is ramping up with more than 1,400 oil and natural gas midstream and upstream projects supported by $163 billion or more in investments. Chris Witte of BASF's Freeport complex stated that Texas alone is home to 12 or more planned chemical-facility projects, including an expansion of Dow Chemical's Freeport complex, marking the biggest industry growth in the state since the 1980s. The concern for some companies is finding enough skilled workers. US Energy Department forecasts that the share of gas in  power generation will increase to 27 percent in 2035 from 24 percent in 2010 and that the U.S. may become a net exporter of liquefied natural gas in 2016 – that is in another four years from now. U.S. LNG exports may start with a capacity of 1.1 billion cubic feet a day in 2016 and to be doubled by 2019. Other gas rich countries are also looking at the possibility of exporting gas and obviously large oil importers like India are eagerly awaited markets. These developments will seriously impact international oil prices and in all probability, being a substantial importer of oil, in our favour.  

If this be the case, what are we waiting for? Our own reserves are not being utilised the way we ought to. Even the expected production from Reliance has of late reduced. Many power projects shaping up along the east cost are in serious predicament. We have not yet succeeded in firming up strategies to gainfully exploit the reserves in our immediate neighbourhood - Bangladesh, Pakistan and Myanmar.  Proposed schemes based on Iran and Central Asian countries are yet to take final shape. Import from USA is a serious future option but to a certain extent disadvantaged because of the distance involved. However it is essential that we have the necessary strength to engage in purposeful negotiations. This demands adequate built in flexibility to choose. Infrastructure to handle, store, transport and gainfully use alternate fuels in adequate measure is a must. LNG being a serious candidate todays discussions become highly relevant.  

We take this opportunity to emphasise that Tamilnadu Govt. needs to re-look at its policies towards Chemical Industries in the state, shed its ‘touch not chemicals’ attitude as perceived by many in the chemical sector and embark on a new chemical industry friendly regime in the state. Bold, pragmatic policy initiative in this area is bound to attract more investment into the state and eventually contribute substantially to the revenue and all round development of the state. It goes without saying that balanced development of different sectors of industry and not selected ones alone will ensure long term sustainability and growth. We trust that the state govt. will act soon enough to ensure that the opportunity now at the doorstep is fully cashed and the chemical sector in the state leaps forward in the coming years.