New Delhi: Russia’s largest integrated petrochemicals company PJSC Sibur Holding’s plan to build a large petrochemical plant with state-run Indian Oil Corp. Ltd (IOC) at Paradip has hit a roadblock due to the sanctions amid ongoing Russia-Ukraine war, said two people aware of the development.
The two partners were slated to sign an agreement for the facility but Sibur, also Russia’s largest liquefied petroleum gas producer, has kept its plan on hold following the sanctions on Moscow amid the Ukraine war. This led IOC to go ahead with the project on its own.
Sibur’s participation in the petrochemicals venture was billed to be part of a multi-pronged approach between India and Russia involving a joint collaboration in petrochemicals, energy sourcing and supplies, as well as upstream investments in both the countries. The last large investment from Russia in the Indian energy space was the $12.9 billion acquisition of Essar Oil Ltd in 2017 by a consortium led by Rosneft that included the sale of the 20 million-tonnes-per-year Vadinar refinery and the Vadinar port.
Mint reported on Sibur’s proposed investment on 5 August 2021. The investment was explored given IOC’s focus on expanding its petrochemical business amid growing demand for petrochemicals in India and worldwide. As of 2022, India was the sixth largest petrochemicals market in the world with a market size of $190 billion, and is expected to reach $1 trillion in 2040.
“While we are facing problems with our assets in Russia in the wake of sanctions, even proposed Russian investments in India such as that from Sibur are stuck. They were looking to partner with Indian Oil Corp. Nothing is happening on that front. While the project is moving ahead but Russian interest has waned,” one of the persons said requesting anonymity.
Queries emailed to spokespersons of IOC, Sibur and India’s petroleum and natural gas ministry on 18 July did not elicit a response till press time.
State-run firms are facing a host of issues with Russian ventures as reported by Mint, including ONGC Videsh Ltd (OVL) waiting to receive equity rights for its shares in Sakhalin-1 oil and gas fields; and OVL, Bharat Petroresources Ltd, IOC, and Oil India Ltd facing delays in getting about $400 million worth of dividend payments from CSJC Vankorneft and LLC Taas-Yuryakh given the ongoing difficulty in transferring it from Russia.
IOC’s 15 million tonnes per annum Paradip refinery in Odisha was commissioned in 2016 and produces various grades of petrochemicals, with para-xylene and PTA plants under the implementation stage.
India is trying to leverage its position as a key refining hub in Asia to boost its petrochemical capacity.
Updated: 30 Jul 2023, 11:36 PM IST
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