THE VIEW at night is spectacular. On an enormous, arid tract along India’s west coast, in the state of Gujarat, Reliance Industries’ Jamnagar facility glitters like the skyline of new York.
Within a 12 months, however, the scene will develop into but more extraordinary. Adjacent to the 660,000 bbl/day refinery that has operated at Jamnagar for eight years, a 580,000 bbl/day export-targeted refinery is rapidly rising into the sky.
The awesome sight reflects Reliance chairman Mukesh Ambani’s grand ambitions, his propensity to conceive huge tasks, and his capability to get them built.
Ambani thinks about the longer term, and he likes to suppose massive – traits which, by all accounts, he inherited from his father Dhirubhai Ambani, a man who began his working life as a gas station attendant, however completed life as founder of the Reliance empire, a real rags-to-riches story.
In all sectors the place Reliance has an interest, the imaginative and prescient is analogous: look to the future, use high know-how, combine along the worth chain and go for giant scale.
AMBANI’S Massive AMBITIONS
When Reliance constructed its first refinery at Jamnagar in 1999 for $6bn ( .4bn), it was one of many world’s largest and most subtle plants. Quickly after, Ambani was contemplating a second big refinery alongside the primary, with better sophistication to process heavy crude and produce costly varieties of gas.
Together, the 2 models would constitute the biggest refinery complicated on the planet, able to course of 1.2m bbl/day. That complex is now close to being realized.
The new refinery will course of heavier, 24 API crude, and it will have a Nelson Complexity Index of 14.
The present unit has a crude slate of 27 API and an eleven.3 Nelson Complexity Index. The brand new refinery may also home a polypropylene (PP) unit with a capacity of 900,000 tonnes/yr. The mission is situated in the special financial zone subsequent to the prevailing refinery in Jamnagar.
US oil main Chevron has bought a 5% stake in the brand new refinery for $300m. Chevron will provide the plant with its low-quality, onerous-to-market Neutral Zone crude. It may also assist in advertising the high-octane gasoline in the US and elsewhere. Chevron has the option to lift its stake in the plant to 29%, and it has indicated that it might achieve this once the project is completed.
Refining profits are at the moment high and world refining capacity brief, but numerous different tasks are beneath manner and so pace is essential. Analysts say that in about 5 years, there may be more likely to be overcapacity, especially in Asia, as US demand development slows. Ambani is, due to this fact, pushing to get the second refinery functioning, whereas the profit window continues to be extensive open.
“A typical refinery takes forty-45 months to build, but Reliance will probably be constructing in less than 36 months. That is one of the best schedule to be achieved in troublesome market circumstances,” says Hital Meswani, govt director of the corporate.
Reliance is targeting a start-up date of mid-2008. In keeping with Jamnagar site president P Okay Kapil, sixty three% of the overall challenge is full, including 86% of the engineering work, eighty four% of the procurement and 36% of the development section. “We are actually accelerating into the development phase,” he says.
The previous executive director of the Indian Oil Corp. (IOC) Panipat refinery, Kapil observes that the challenge has been in a position to proceed ahead of schedule and within funds because it’s being executed by a non-public firm and never by a authorities oil agency.
“In the general public sector, the system is vitiated in opposition to the project, and procedures at all times outweigh finish results,” he says.
Perennial time and cost escalations in government-sector tasks are the consequence. “The idea of extended proprietor-manager that exists within the Reliance setup greatly helps in work execution, a notion absent in the public sector,” he asserts.
Reliance is targeted on maintaining costs below management. “The first way to scale back costs is to compress the implementation time,” says Meswani, govt director of the company. Reliance booked vendor capability in advance and ordered lengthy-lead gadgets first. Equipment was standardized to take advantage of bulk shopping for. And, as a substitute of taking the standard lump-sum turnkey (LSTK) strategy to the venture, Reliance has been carefully concerned at every stage to expedite completion, provides Meswani.
The pay scale also retains building costs low. Expert employees comparable to welders earn around $eight a day, and laborers, $3 a day.
The new refinery is being constructed for $6bn – nearly 40% lower than international costs. The challenge is expected to value just $10,300/bbl of refining capacity, almost one-third less than the estimated cost of building two enormous refineries planned for in Saudi Arabia.
It helps that Reliance had only recently executed the same refinery project at Jamnagar. “We haven’t repeated the identical mistakes this time,” says S. S. Saini, senior vice president for operations and the man in charge of operating the 2 refineries. Reliance has mobilized your entire challenge crew that labored in the first refinery. Saini says that 90% of the operations team for the brand new refinery can also be already in place.
Building the new refinery at Jamnagar includes over 200,000 engineering and supplier documents, the installation of 165,000 tonnes and 53m cubic toes (1.5m cubic meters) of concrete, 138,000 tonnes of structural steel (equivalent to 15 Eiffel Towers), greater than 4,four hundred pieces of major tools in over a dozen complexes throughout the refinery, and 13m toes (4m meters) of piping.
The venture site covers an area larger than London, and more than 80,000 staff will likely be employed throughout the peak of building – round the identical number deployed in constructing the primary refinery.
To overcome the shortage of expert building staff, Reliance has arrange a facility in Jamnagar to prepare an estimated eight,000 welders, 5,000 carpenters, 5,000 pipe fitters and some thousand grinders and mill wright fitters.
Reliance is also installing a 2m tonne/year gasoline cracker at Jamnagar. The $3bn unit will use offgases from the two refineries to make olefins and derivatives that Reliance officials say will lower manufacturing prices, making it comparable to crackers in the Middle East.
“I believe that just as we created a competitive place in propylene [through refinery integration], we will be doing the identical in ethylene,” says Meswani.
The timeframe for completion of the cracker is 2010-2011, and officials say the company will focus totally on the cracker once the refinery is commissioned subsequent year.
ABOVE AND Past
The total configuration of the cracker is expected to be introduced inside three months, and a Reliance spokesperson instructed ICIS that the capacity is likely to increase by about 15%.
Reliance is taking a look at producing derivatives corresponding to excessive-density polyethylene (HDPE), low-density polyethylene (LDPE), linear low-density polyethylene (LLDPE), monoethylene glycol (MEG), isopropyl alcohol, propylene oxide (PO) and acrylonitrile (ACN).
Company officials say Reliance is keen to pursue downstream initiatives in the Special Financial Zone where the refinery is positioned in partnership with specialty gamers. The primary such joint enterprise, established with Rohm and Haas, is exploring the joint construction of an acrylic-monomer advanced at Jamnagar.
Not surprisingly, a undertaking of such size, constructed at such speed, has generated its share of controversy.
For instance, Reliance is commonly accused of influencing state and central governments in India to additional its interests, and some observers see examples in benefits obtained by the Jamnagar venture.
When the primary refinery was conceived, the Gujarat state authorities granted the company a ten-year vacation from steep sales taxes. Now the Indian authorities has agreed to Reliance’s request to convert the prevailing refinery into a fully export-oriented facility, a status routinely accorded to the new refinery positioned in the Special Financial Zone.
Mukesh Ambani, however, conceives of Reliance as a power for good in both Gujarat and India. One of the speakers on the Vibrant Gujarat International Investors’ Summit 2007, held in January, he introduced that Reliance Group would be investing Indian rupees (Rs) 675.5bn ($16.8bn, 2.1bn). When he concluded, it was with the flourish of an bold native son.
“Reliance is a Gujarati company. It’s an Indian company and it is a world firm. That is the way it was conceived by my father Shri Dhirubhai Ambani.”
Main process units at the brand new refinery
Crude distillation units 580 kbpsd
Vacuum distillation items 305 kbpsd
Catalytic feed hydrotreaters 220 kbpsd
Fluidized catalytic cracker 200 kbpsd
Delayed coker 160 kbpsd
Hydro cracker one hundred ten kbpsd
CCR platformer eighty five kbpsd
Alkylation 85 kbpsd
Catalytic product hydrotreaters 360 kbpsd
Polypropylene 900 ktpa
kbpsd = thousand barrels per stream day
ktpa = thousand tonnes per annum
Source: RELIANCE INDUSTRIES
Males AT WORK
Reliance is setting a frantic tempo to construct its second refinery at Jamnagar. To make this attainable, it has already deployed 65,000 personnel for the undertaking, a number that is set to rise to eighty,000 in two months as the project enters the accelerated construction section.
This determine includes 2,500 engineers working for Reliance and four,500 engineers attached with contractors. One among the most important construction sites in India, Jamnagar attracts employees from all around the country.
For a few of them, being separated from family on the desolate west coast of India might be as taxing as the frenzied tempo of the mission. Many, although, had been excited to be associated with the scale of the work and the obligations their jobs offered – people comparable to engineer Deepak Shukla, a local of Gujarat, or 19-year-outdated Padmadhar Boro, a bellhop on the sprawling Reliance visitor house in Jamnagar. Boro comes from Assam, a state in Northeast India known for its reluctant travelers. He mentioned there have been 22 other young men from his state working on the venture in Jamnagar.
Some miss the massive metropolis. Engineer Sujit Mahanta, who married Wipro executive Rishika earlier this year, is an efficient example. Spending some uncommon quality time together with his wife, who had flown over from Gurgaon, close to Delhi, for the weekend, he admitted that he is open to prospects in Delhi.
Captain Sawresh Gon additionally misses Delhi. A strapping young seaman who sailed with a Norwegian provider till a yr ago, he manages a deepwater jetty, the place tankers dock to unload crude or receive refinery merchandise.
“I miss Delhi very much, despite the fact that I have my family here,” says in his workplace, which was Reliance founder Dhirubhai Ambani’s meditation room. “Whereas the work is difficult, there will not be a lot to do exterior of labor.”
Reliance has accomplished its greatest to make Jamnagar homely. The township for staff has schools, health centers and recreation services similar to gyms, swimming swimming pools, film theaters and even a new Reliance hypermart.
A total of 3,000 apartments are being added now to house the engineers and technocrats descending on Jamnagar for the project. For construction staff arriving mainly from the states of Bihar, Orissa, Uttar Pradesh and Andhra Pradesh, 5 new colonies are being developed on 250 acres of land close to the construction site, each with their own infrastructure facilities.
THE FRUITS OF LABOR
Whether it’s petrochemicals or mangos, Mukesh Ambani dreams huge. In the strategy of constructing the world’s largest refining complex at Jamnagar, Ambani has additionally established Asia’s largest mango orchard, and the corporate plans to develop into India’s largest mango exporter, selling three,600 tonnes/12 months.
Each refinery within the country is required by legislation to determine a inexperienced area. Reliance decided to do this in a big way, establishing a 7,500 acre (three,038ha) greenbelt around the refinery. The green belt contains greater than one hundred,000 mango timber, producing one hundred ten types of the fruit. The green belt additionally has 32 different kinds of produce, reminiscent of guavas, pomegranate, oranges and cashews.
Chief horticulturist T. M. Thimmiah lately gave a tour of the greenbelt, which has quick mango plants, instead of standard trees. “We do not permit the mango timber to develop past 10ft [three.05m] because it is less complicated to take care of and pluck this manner,” he explains.
Apart from major Indian mango varieties equivalent to Kesar, Alphonso, Ratna, Sindhu, Neelam and Amrapali, international variants like Tomy Atkins and Kent from Florida and Lily, Keit and Maya, from Israel are also grown within the orchard.
Small pipes originating on the refinery carry waste water and desalinated seawater to the mango orchard for irrigation. Gypsum and sulfur by-merchandise from the refinery are used to deal with the salinity.
Whereas about half of the mango produce is exported. The remaining is sold by means of the nationwide Reliance Fresh grocery shops, that are a part of the company’s bold retail venture.
A Reliance official says the profit margin from mangos is larger than that of any of the petroleum products Reliance produces.
Because the Jamnagar undertaking enters its accelerated development phase, up to 80,000 staff shall be deployed
Hyperlinks In the CHAIN
Reliance Industries’ new refinery at a special financial zone in Jamnagar, on the west coast of India, could well be the start of a series of petrochemical tasks at the megasite.
A cracker with an olefins capacity of at least 2m tonnes/year, primarily based on offgases from the new and present refineries, has been announced, and more tasks are in the pipeline.
“With the completion of the brand new refinery, Reliance can have a complete refining capacity of medium salt distillation column 1.25m bbl/day. That provides us ample opportunity to play round with plenty of feedstocks,” says Nikhil Meswani, govt director of the agency.
The 2 refineries will present 6m tonnes/12 months of petroleum coke. “That is pretty much as good as coal on the ground with decrease ash content material,” he says. “There are a number of possibilities.”
A study is also below way to look at the feasibility of producing various petrochemicals, together with acetic acid.
Reliance might be looking at every worth-added product within the C1 to C8 chain. And it’s open to partnerships. The goal is to create a new petrochemical enterprise with higher value addition in an effort to sail via the subsequent downturn.
The company has already signed an agreement with Rohm and Haas for acrylic acid production at Jamnagar. Some of the other products identified for Jamnagar are propylene oxide (PO), isopropanol (IPA), acrylonitrile (ACN), styrene butadiene rubber (SBR) and butyl rubber. Know-how contribution would, of course, be key to any joint venture.
But the bread and butter commodity products will continue, with polyethylene (PE) and monoethylene glycol (MEG) likely to be the key derivatives downstream of the cracker and aromatics from the refinery probably to return afterwards.
After having successfully established international competitiveness in polypropylene (PP) by integrating with propylene from the refinery, the main target now could be on PE.
Another chance is chlor-alkali and polyvinyl chloride (PVC), with Reliance utilizing its gasoline finds to produce cheap power, and tapping India’s west coast for salt. “We are taking a look at two to a few choices and will give you some modern solutions quickly to manufacture PVC. We’re not far from it,” says Meswani.
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