Industrial gas giant Air Products & Chemicals Inc. (APD - Free Report) entered into a long-term industrial gas supply contract with India-based Bharat Petroleum Corporation Limited. While Air Product’s stock price fell 1.6% on Oct 3 due to broader market decline, the deal holds significant potential of growth for the company.
Per the contract, Air Products will supply hydrogen, syngas (a mixture of purified hydrogen and carbon monoxide), nitrogen and oxygen to BPCL's Kochi Refinery and its proposed petrochemicals complex by constructing and operating several new industrial gas production facilities in Kochi, India. The initial supply of gases to BPCL's Kochi Refinery is expected in late 2015.
The new facilities will mark Air Products' first hydrogen production facilities in India. It will supply industrial gases to BPCL's Kochi Refinery which is at present subjected to a $2.6 billion integrated expansion project. The expansion project will increase its crude refining capacity to 15.5 million metric tons per annum (roughly 310,000 barrels per day).
The plant will be designed with latest technology that will help maximize energy efficiency by reducing energy consumptions and emissions, and will also have optimal heat integration technology to lower feedstock consumption during production.
Pursuant to the deal, Air Products will provide two steam methane reformer (SMR) trains combining to produce roughly 16.4 tons per hour of hydrogen used in the production of cleaner burning transportation fuels and petrochemicals, a cryogenic syngas purification system to produce syngas, and steam generated from its units for BPCL's manufacturing process to the plant. It will also provide an air separation unit to produce nitrogen and oxygen for the refinery and petrochemical complex, and a gas turbine to produce power for the Air Products facilities.
The deal will benefit Air Products in expanding its supplying refineries base of industrial gases and to meet the growing industry demand across the globe. It is also beneficial for BPCL and the petrochemicals facility for diversification into higher value-added petrochemicals.
Air Products will construct the new hydrogen facilities through the global hydrogen alliance formed with Technip, a global leader in project management, engineering and construction for the energy industry. The alliance, which is in place for 20 years, is responsible for building over 35 SMR hydrogen plants situated in 11 different countries around the globe and produces over 2 billion standard cubic feet of hydrogen per day for clean fuels production.
Air Products currently maintains a Zacks Rank #2 (Buy).
Other companies in the chemical industry having favorable Zacks Rank are Praxair Inc. (PX - Free Report) , BASF SE (BASFY - Free Report) and FMC Corp. (FMC - Free Report) . All of them retain a Zacks Rank #2 (Buy).