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What Is Chemical Hub
What Is Chemical Hub
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CHEMI CAL H
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manufacturingunits, thereby making the Hub a very atti'activelocation for manufacturing
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Hub. It is like a relay race where the final product of one unit becomesthe raw material of
another unit,~oWing them to benefit from eachother symbiotiCallyin a chain sequence.
Entire clustersalong a chemical chain are locatedin the ChemiCalHub so that companies
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: along the value chain can interlink their production processesand achieve the benefit of
The basic raw materialsfor a chemical hub are crude oil and naphtha.Thesecommodities
are transportedin bulk by sea using large tankers,and therefore a chemical hub has to be
f,\ t..: located near a 'POrt facility. Crude oil is the raw material for the refinery. The refinery
. eo ,,'0, produces naphtha (along with other products), Which is the basic raw material for the
J .,;~ cracker plants. Naphtha can also be imported directly. There can also be gas crackers,if
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, A Chemical Hub can provide opportunities for collaboration between industry players to
~ ' reap the benefits of resource sharing to reduce costs, greater marketing power and an
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j; ~: ' enabling envirOnment.There are numerousadvantagesof such a Chemical~ub, Some of
';',J' theseinclude:
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. Highways and Expressways,Railways and Freight Corridors to connectthe region
to the rest of the country.
. Suitable deep water Seaport with ship-to-ship transfer and enhancedcontainer
facilities, andAirport, to connectto the rest of the world..
. Pipeline corridor to carry crude oil and other productsbetweenthe seaportand the
chemicalhub.
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~..-";:' ... . Coal & other raw material linkages. .1,"
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. Townships, housing, modem hospitals, schools and colleges, banks, hotels and
environmentallyrefreshingsurroundings.
. Community service organizations for the well being of the people living and
working~ the region.
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In addition to the chemical plants, a Chemical Hub attracts third-party companiesthat
provide utility and support serviceslike power, water, effluent treatment,waste disposal,
warehouses,tankage and tenninal facilities, repair and maintenance.All the chemical
plants need utilities like power, steam, tritiogen, oxygen. demineralisedwater, cooling
water, etc. In the Hub, the chemical plants can purchaseutilities as per their requirement
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from the utility companies,which are also located within the Hub. Thus, the chemical
manufacturingand processingunits do not have to install their own power or water or
steamplants, ~d at the sametime, the companieswhich producetheseutilities are able to
sell their product to all the chemical units, andthus can generatethe utilities at lower cost
due to the econo~es Qf scale and becauseof their specialized expertise in that field.
Similarly, a third party logistics companycan centrally,IJlanagethe inbound and outbound
logistics andthe storagefacilities of the chemicalplants at lower cost.
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.This will lead to the entry of other manufacturerskeen to be locatedin this high-growth
region, which in turn will feed revenuestreamsto justify creation of more infrastructure.
This would result in increasedemploymentopportunitiesandthe economywill grow.
A chemical hub like Jurong Island; Singaporeis expectedto attriict investmentover Rs.
70,000 crores..A bigger chemical hub like ShangJIaiin China would attract more
investmentand generatemore revenues.Investorsprefer to invest in a chemicalhub rather
than in a $!.and-alone
location, becausechemical hubs provide the avenuesfor efficient
conversationof capital. , ,
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Inshon, development
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ofaChemicalHubcanbe expectedto havemanypositivesocialand ._:c..:_.,::::::::::,.:",=::-:~::---
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technologicalfu1pacts,such as:
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centers;
. Increasingthe efficiency of productioncapabilitiesand infrastructure.
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The economicprospectsof the whole region surroundingthe ChemicalHub would improve
remarkably, providing millions of man-daysjob potential. Considering at least 500
companies,small and big, operating in the area,employmentpotential could be more than
one lakh directly. Including downstream processing and related support services, the
employmentpotential could be of the order of 10 times as large. As the living standardsof
the peopleof the region improve, it will openmany avenuesto start businessof many kinds
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andthe economyof the region will get further boost.
International C
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International Chemical Hubs have developedin Europe and America sincethe early years
of the 20mcentury. Theseinclude the chemicalhubs in Port of Rotterdam(Netherlands)~
Port of Antwerp (Belgium), arid Bayport Estatein Houston (USA). The chemicalhubs in
Asia,Middle-EastandSEAsia that havedevelopedin the recentpast(1980's)includethe '.
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: ones in China: (Shanghaiand Nanjing), AI Jubail Industrial City in SaudiArabia, and
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developed around refinery/ petrOChemicalcomplexes.'.The recently developedchemiCal
hubs in Asia region have bee~ planned with the setting up of refinery / petrochemical
complexes. All of them have essentiallydevelopedill regions having well-developedport
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infrastructure.
Details of some
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':,, setting up of the
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MMTPA (million metric toD!)esper annum).The region also has 44 Chemical& '~"\,
Chemical Hub of paR employs 60000 people.New investmentsare regularly being made
in this region and the estimatednew investmentssince 1990 in oil & chemicalind~ in
paR hasbeenaroundRs 5000 crores.
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Jurong Islands: In the late 1960s and early 1970s, three oil companies,viz. Esso,
Singapore Refinery Company and Mobil Oil, set.up their refineries in three different
islandsof. Singa~re (including Jurongand two smallerislands)due to availabilityof -
accessto the sea. Subsequently,Shell also setup a refinery in the region.The total refining ,-
capacityof JurongIslandsis 0.9 million barrelsof crude oil ~r day, therebyprovi~ the
major feedstock for the Petrochemicalsector. The downstream integration from the
Refinery sectorto the Petrochemicalsectorstartedin the 1980's. The first naphthacracker
was operatiQ~ in 1984,follow~by the next in 1996. The total ethylenecapacityof this
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chemical hub is 2MMTPA. An aromaticcomplex 0£0.35 MMTPA paraxylene~d 0;096
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has also beenset-up.Juro~ Islandshouses72 oil&petrochelIricaL
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companieslike BASF, BP, Celanese,Exxon-Mobil, Dupont, Mitsui Chemicals,Chevron
Oronite, Shell and Sumitomo Chemical. These companies are taking the benefits of
comprehensiveinftastructure and production synergiesfrom this unique cluster of oil,
petrochemicaland specialitychemicals.
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Shanghai Chemical Industry Park (SCIP): SCIP is located on the north bank of Hong ", ~
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Zhou Bay, on 3000 hectares,is one of the l~est chemicalhubs developedin China during'
the period of "the Tenth-Five-Year Plan". The phase I project is mainly for the
developmentofpetrocheinical and natural gas chemical projects. The phasen project is
mainly for the development of new ~thetic materials, fine chemicals and other
petrochemicalprocessmgprojects. In PhaSeI, BP,BASF, Bayer, Huntsman,Air Products
-and Chemicals, Ltd., Suez, VOpak, Air Liqwd, Praxair and other multinational \';,
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petrochemicaland utility corporationshavestartedtheir projectsin SCIP. '
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Dahej, Gujarat: In India, the largest chemicalclusteris in Dahej in Gujarat. Prominent
amongstthe e . . g are the IPCL Plant with a ethylenecracking capacity of 0.4 MI\.frP A
(60,OOOMT).
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To give a boost 0 the chenrical & petrochemicalindUstriesin Gujarat, and to further
develop the exi . g chenricalcluster in Dahej, the Gujarat StateGovernmenthas planned
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to setup a PCPIR Dahej, with a SEZ. ONGC is reportedto be an anchor investor in that
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project.
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Large global cb cal hubs essentially require the presenceof refinery and pettochemical
complexes,which gene:ratethe basic feedstockrequired as raw material by all the other
chemical & petroc emical units. Various useful chemicals,petrochenricalsand polymers
reqUiredfor ourda ~to..;day
activities arederivedfrom thesechenricalhubs.
The various appli tions of the productsas derivedfrom thesechemical hubs include (but
not limited to):
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1. Liqu trolewn gas (LPG), used as cooking gas, and also used as
auto and industrial fuel.
2.. Bitume and asphaltare usedasroadtar.
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3. Syritheti fibres, AIiti-tteeze fibres, Polyester textiles, which are used for
manufac e of dressmaterials,tents,anti-fire clothing, life-savirtgjack~ts.
4. Usedin anufactureof commodityplasticslike
a. lastic bags (milk bags, woven sacks for various co~Oditi~s, e.g.
. c ment),
b. lasticsheets;tarpaulins -- ,
c. P kaging materials,
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buckets,mugs)themlowares(e.g. flasks~h:~
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c cases),food and milk cratesand other householditems,cups,plates
'i.. f. Furniture (chair, tables)
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g. Ro~s & twines,
h. Moldedluggage,
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k. Building materials (flooring, doors, window frames, partition walls,
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greenhouses), ,
1. " Cassettes, Compact discs, credit cards, .'
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m. Automotive parts (bum~rs, flash lights, dashboards). i";,
5. Medicftl products-injectionsyringes,IV drip bottles, medicinebottles.
6. Man~actureof Paints,Enamels,SolventsandThinnersasusedin paints. ~
7. Deter~ents.
8. Spo~ goods,toys,"andinflatablematerials. .
Cabl~~etc.
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introduced thecpncept of Petroleum, Chemicalsand Pe
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, To promote invesJent in this sector and makethe country an important hubfor both domesticand
The PCPIR Policy announced by the Governmentof India envisagesa Chemical Hub
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The Haldiaregion is a suitable location for a'PCPIR, becauseof the presenceof IDC
Refmery, HaldiaPetrochemicals,Mitsubishi Chemicalsand other units, and becauseof the
availability of port facilities. Later~if the deepseaport materializes,this will also not be
very distant ftom Haldia. These were the factors which prompted the consultants
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appointedby (jovernment of India to shortlistthe Haldia region. There is no other suitable
Jocationin West BengalbecauseWest Bengalhasa very small coastline~a major portion of
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which falls within the protected ecologically frilgile Sundarbans. The PCPIR cannot be
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located in interior areas.
The subject of setting up a chemical hub (PCPIR) was also examined by the Standing
Committeeon Commerceand Industries and Industrial Reconstructionand Public Enterpriseof the
14th West Bengal Legislative Assembly, chaired by Shri Sudip Bandopadhyay,MLA. The
Committeefelt that "11zelands covering along the side of the Riverfor theproposedprojects with
locational advantages.Port facilities to be built up and all requisite infrastructure to be developed
and having enormouspossibilities and bright prospects appear to the Committee viable and
,. feasible for conunissioningprojects. 11ze'Committee thinks: it would add impetus to change
~ radically the existingindustrial scenario and with selectionof the site. there would (yery possibiliry
'i: The GovernmeDtiofWest Bengal is keen to establisha PCPIR in West Bengal, becauseit
will cataiyse lqe investments in infrastructureand manufacturing, and genemte huge
employmentopportlmities. In order to implementthe project, the StateGovernmentba') to
formally apply to the Governmentof India, in the format prescribedin the PCPIR Policy of
the Governmentof India. In the meanwhile,the StateGovernmentba') also identified an
anchordeveloperand an anchor investor. ,
r; (which includes land filling, in.temal roads, water supply, power supply, sewerageand
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drainage, efiluenttreatment, hazardous waste treatment and disposal etc.), the State
Government bas entered into an agreementwith a consortium called New Kolkata
InternationalDevelopmentPvt. Limited (NKID). The Chemical Hub will be developedas
ajoint venturebetweenWBIDC and NKID.
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In order to bring in an anchor investor, whosepresencewill attmct downstreaminvestors,
the'StateGovernmentba') entered into an agreementwith Indian Oil Corpomtion. In terDlS
of that agreement,IOC Will set up anotherrefinery of 15 million tonne capacity(linked to
the establishmentofa deep seaport), a paraxyleneplant, and other units. If the Chemical
reality, the investmentsby IOC alone is expectedto be well
It is in the inter stof the State for the State Governmentto submit its applicationto the
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Governmentof fndia for a PCPIR at the earliest. If West Bengal does not apply to the
Governmentof ~dia for establishinga PCPIR, and in addition to Gujarat and Andfu-a
Pradesh,'other crastal States like Orissa, Tamil Nadu, Kamataka and Maharashtraalso
apply, then PCP~ will come up in those States.. West Bengal will be deprived of the
massiveinvesttn nt in inftastI'uctureby G~ver.nmentof India, and the hugeinveStmentand
consequentempl ~ent potential of a chemicalhub.. These investmentswill flow to the
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17 May 2007
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Appendix-I
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Packaging
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