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BP & Indian Oil scrap acetic acid Project in Gujarat

UK-based BP and Indian Oil Corporation's (IOC) joint effort to set up a 1-million-tonne-per-annum acetic acid plant in Gujarat has hit the wall. The companies have now decided to scrap the project, as feasibility studies suggest that the plant is economically unviable.

IOC director (planning & business development) AMK Sinha said the company board couldn't approve the project, as it did not meet the minimum return on investments norms. “There are certain issues on the capital cost. It appears that the project is not meeting the requisite norms,”.

In November 2011, BP and IOC announced plans to set up a 50:50 joint venture for a 1-mtpa acetic acid plant in Gujarat and build infrastructure for gasification facilities to produce synthethic gas.

“Despite the best efforts of our combined teams, we have faced a number of challenges, particularly with capital costs, in developing an attractive project. Earlier this year, BP and IOC had jointly decided not to pursue this project,” BP said in a response to.

BP said it has worked closely with IOC since 2011 to explore options of setting up an acetic acid joint venture in Gujarat. “Given the excellent relationship we enjoy, we will also continue to work on other joint opportunities in the petrochemicals arena in future,” it said. The companies never disclosed the investment they targeted to make for the acetic acid plant.

“A joint feasibility study is under way to confirm the exact configuration of the project that would have a targeted start-up date in 2015,” both IOC and BP had said in a joint statement on November 23, 2011.

Acetic acid is used in the petrochemicals and paint industry. On the other hand, synthetic gas is produced as a byproduct of acetic acid. At present, there is a demand for about 600,000 tonnes of acetic acid in India that may rise to 1 million tonne by 2015.

The feasibility study for new acetic acid plant was carried out in the vicinity of existing Koyali refinery operated by IOC. The proposed plant was to employ BP’s Cativa XL technology while gasification facilities would utilise petroleum coke feedstock from IOC.

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