BP and Indian Oil Corporation plan to set up a 50: 50 joint venture acetic acid plant in Gujarat.
The two companies have entered into a memorandum of understanding to invest in a one million tonne per annum acetic acid plant with associated gassification facilities for production of synthesis gas. Acetic acid is used in petrochemicals and paints, apart from other products.
A joint feasibility study is currently under way to confirm the exact configuration of the project, which is expected to be commissioned in 2015, separate statements issued by the two companies said.
The proposed plant would employ BP's latest Cativa XL technology, whilst the gassification facilities would utilise petroleum coke feedstock from Indian Oil.
On whether BP-Reliance Industries agreement will have any impact on this understanding, official sources said, “The BP-Reliance Industries agreement does not include venture into acetic acid business.”
Sources said, currently Gujarat Narmada Valley Fertilisers Company (GNFC) is producing acetic acid. GNFC’s plant is unable to meet the entire domestic demand. GNFC capacity is 160,000 tonnes per annum.
The current supply-demand gap is about 600,000 tonnes, the official said, adding that the gap is met through imports. “By the time the joint venture plant is proposed to come up (in 2015) the gap would be about one million tonne, which is the proposed capacity of this plant.”
Indian Oil recently commissioned a coker unit with one million tonne petcoke capacity at Gujarat Refinery. The acetic acid will be a good opportunity for enhanced value addition besides providing window for import substitution, the official said.