Shell to Acquire 50% stake in Nayara Energy’s Petchem Project

Shell plans to acquire a 50% stake in a petrochemical project planned by Nayara Energy (Mumbai, India) and involving an investment of up to $9 billion. based on a 1.8-million metric tons/year (MMt/y) steam cracker and downstream units, will be built at Vadinar, Gujarat State, India, where Nayara operates a refinery. The cost of the project is reported to be $8–9 billion and it would be completed in five years. The project also includes an aromatics complex and will have overall capacity to produce 10.75 MMt/y of petchems.

Shell is a positive development for the proposed petchem project. Nayara, which has been predominantly in the refining business until now—formerly known as Essar Oil—is already investing $850 million to build a 450,000-metric tons/year propylene-recovery unit, a polypropylene (PP) plant with a production capacity of 450,000 metric tons/year, and a 200,000-metric tons/year methyl tert-butyl ether plant at the Vadinar refinery that should be ready within two to two-and-a-half years.

Economic growth in the Indian Subcontinent will help to drive worldwide demand for PP and its applications. The region will have the largest average annual growth rates, about 9%, between 2017 and 2022. IHS Markit says that the subcontinent in the next five years plans to add 1.2 MMt of PP capacities and says that the region’s consumption will continue to grow faster than its capacity. If Nayara’s new petchem project progresses and Shell takes a 50% stake, it will be the largest investment in India by a multinational company in the petchem business. Many multinationals have been evaluating investments in India for the past several years but were skeptical and did not take a final investment decision.

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