CHICAGO (Aug. 11:30 a.m. EDT) — Several large Asian resin and oil companies are setting up industrial parks for plastics processors next to their facilities in India and Saudi Arabia, hoping to both boost their domestic economies and create a platform for export-oriented foreign firms.
Indian conglomerate Reliance Industries Ltd. is starting work on what it said eventually could be a petrochemical city of 40,000 people with factories, housing and green space on the country's west coast, near Jamnagar.
Similarly, oil giant Saudi Aramco launched a new petrochemical complex in March. It wants to attract plastics molders there as part of a strategy to industrialize the country's oil-dependent economy.
In the case of India, infrastructure remains a challenge, so the government is letting companies build what it calls special economic zones, dedicated to particular industries, said Dilip Jaya, senior vice president of Reliance's polymer business group in Mumbai.
A similar project targeting agriculture is being considered in Punjab state.
“India is growing fast, but infrastructure is still an issue,” Jaya said. “The government realizes it cannot do it on its own.”
Reliance's 11,000-acre petrochemical site, which will start with a refinery and a 2.2 billion- pound polypropylene plant in 2008, could have as many as 40,000 residents when the long-term project is completed, Jaya said. Jaya spoke during an interview at NPE, held June 19-23 in Chicago.
Beyond PP compounding, film and sheet extrusion and fiber production, the company said the complex also could have polyethylene and down-stream products like packaging and specialty films, and styrene and polystyrene products. Rubber derivatives could also be located there.
The site, along the northwestern coast near Pakistan, is targeted at exporters, with tax breaks and duty-free importing in some cases, he said. The company, which is India's largest plastic maker, has substantial investment there: Jamnagar is the world's largest grass-roots refinery complex.
The petrochemical complex will have a deep-water port, a desalination plant and its own power, Reliance said.
“It will be totally integrated, from refinery to cracker to polymer to processor,” he said. “It will be a totally independent kind of town.”
Reliance is open to joint ventures with other firms there, Jaya said. India's FinancialExpress newspaper reported earlier this month that Dow Chemical Co. was considering investing in the Jamnagar site. The paper also said the two companies were in the early stages of discussing a larger alliance, including Reliance running some Dow units.
Processors that locate at the site will not have to buy resin from Reliance, he said. The company does not want to put any restrictions on firms there because it wants to develop more of the economic zones, Jaya said.
Saudi Aramco of Dhahran, Saudi Arabia — the world's largest oil company — has a similar motivation: to diversify its domestic economy by encouraging plastic- and synthetic-rubber-product factories near its plants. It wants to use the country's lower cost of plastic and petrochemical feedstocks as an incentive.
In March, the government-owned company broke ground on its Petro-Rabigh petrochemical complex, in a 50-50 joint venture with Tokyo polyolefin producer Sumitomo Chemical Co. Ltd. Saudi Aramco hopes to open the complex in 2008, and is looking at a similar industrial park at its Ras Tanura refinery in 2012.
The Rabigh complex, on Saudi Arabia's west coast, also could give Asian plastics processors in particular a cheaper base for exporting into Europe, Azzam Shalabi, Aramco's director of new business evaluation, told a chemical industry forum in Hong Kong in May.
Aramco said the project will be one of the largest integrated refining and petrochemical complexes built at one time, and will have plants making high and linear low density PE, PP, propylene oxide and monoethylene glycol.
The complex will “propel the development of the downstream plastics conversion industries, which will contribute to the diversification of the manufacturing industries and the creation of job opportunities for the people of the Kingdom,” Sumitomo Chemical President Hiromasa Yo-nekura said at the March launch.