India is playing a role in a global game involving petrochemical production from oil refineries. For at least a decade, investments appear bullish and unaffected by the conflict between Russia and Ukraine. Indian-based refining companies are on track to make significant investments in new capacity, bringing the total from the present 249.22 mmtpa to above 300 mmtpa. Petrochemicals make up a major portion of such investments, however, outside of India, their short-term prospects are bleak due to the threat of global oversupply.
According to figures from the petroleum ministry, over 80% of India’s petrochemical capacity is integrated with refineries. Refineries will benefit since the Indian chemical sector is predicted to increase by 1.2–1.5 times more than the national GDP. Rapid change is occurring in the refinery industry, in part as a result of sudden oil shortages and in reaction to climate change. Refineries in important economies typically receive little notice from the general public because they routinely transform crude oil into a
variety of goods, ranging from petrol and diesel to even chemicals for medicines.
However, the conflict between Russia and Ukraine and the development of renewable energy sources have elevated refineries to the status of a major diplomatic issue.
Despite having a $178 billion market for petrochemicals, India’s per-capita consumption of these products is lower than that of wealthy nations. According to the petroleum ministry, the market would have a cumulative growth rate of 10% and be worth $300 billion in ten years.
There will be a lot of capacity coming online over the next couple of years, not just in India but also in other areas of the world, but we still believe the ramp-up will be very gradual. And that will help ensure that 2023 and 2024 still have some decent cracks.