ONGC-controlled MRPL (Mangalore Refinery and Petrochemicals Ltd. ) plans to expand its refinery to increase petrochemical production capacity at a cost of roughly Rs. 470 billion. 

The state of Karnataka is planning to invest in a new manufacturing plant. In addition, MRPL intends to invest in smaller petrochemical operations.

A shifting energy landscape primarily driven by the uptake of electric vehicles has prompted MRPL to focus its efforts on increasing output of chemicals that can be used for plastics and paints,” Sanjay Varma, managing director, said in an interview.

The company’s major investment will be on a new production plant in Karnataka,” he said. Indian and Chinese refiners, as well as majors such as Exxon Mobil Corp., are counting on petrochemicals to support future oil demand as the shift to electric cars reduces the use of transportation fuels.

The new MRPL plant is likely to be operational in the next three to five years,” said Varma.

India is a net importer of petrochemicals and the country is facing a make-or-buy decision,” said Larry Tan, vice president of chemical consulting in Asia at S&P Global Commodity Insights in Singapore. “There is better value to capture production locally.”

According to Varma, MRPL, which is majority owned by the state-controlled Oil and Natural Gas Corp., expects to invest roughly 300-400 billion rupees in the new facility and another 60-70 billion rupees in smaller petrochemical plants.

The investment will help “de-risk MRPL’s future” during the energy transition,” he added.

The investment will contribute to ONGC’s overall spend of 1 trillion rupees to expand its petrochemical capacity to 8 million tons a year by 2030, from 3.4 million tons,” according to a spokesman for ONGC.

While MRPL abandoned plans to increase the capacity of its west coast refinery to 18 million tonnes per year from 15 million tonnes, the unit has continued to operate above operating levels, according to Varma. According to him, the refinery ran at a record average of 17.1 million tonnes per year in the fiscal year ending March 13.