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New Delhi: State-owned Oil and Natural Gas Corporation (ONGC) has signed an agreement with Japan's Mitsui OSK Lines to enter into a partnership to build two very large ethane carriers that will be used to import petrochemical feedstock for its subsidiary.
In a regulatory filing, ONGC said it signed a Heads of Agreement on Thursday with Mitsui "to enter into a partnership to build, own and operate two very large ethane carriers (VLECs).
It, however, did not give financial details of the partnership, including the equity stake the two firms would hold.
"The VLECs shall be shipping imported ethane to ONGC Petro Additions Limited (OPaL), a subsidiary of ONGC, for captive use as feedstock," the filing said. "This arrangement is subject to Board approval and further details shall be shared after signing of the partnership agreement.
ONGC plans to import ethane starting in mid-2028 to compensate for the altered composition of liquefied natural gas (LNG) sourced from Qatar, according to a tender that the state-owned firm floated in March this year for selecting a partner for building the VLECs.
India imports 7.5 million tonnes per annum of LNG from Qatar. Under the deal, QatarEnergy supplies 5 million tonnes a year of LNG that contains methane (used to produce electricity, make fertiliser, converted into CNG or used as cooking fuel) as well as ethane and propane -- feedstock to make LPG and petrochemicals -- on a firm basis and the rest on best endeavour basis.
This contract is coming to an end in 2028 and the revised contract signed last year envisages QatarEnergy supplying 'lean' gas (one that is stripped of ethane and propane).
ONGC had spent about Rs 1,500 crore in setting up a C2 (ethane) and C3 (propane) extraction plant at Dahej in Gujarat. The C2/C3 so extracted was used as a feedstock in its petrochemical subsidiary, OPaL.
With the changed composition of LNG, the company is now looking at importing ethane.
OPaL "is having a mega grassroot petrochemical complex and having the largest standalone dual feed cracker in Southeast Asia. Plant is having a dual feed cracker i.e. a mix of Naphtha and C2 (Ethane), C3 (Propane) & C4 (Butane) as feedstock," the tender document had said. "ONGC plans to source and supply 800,000 tonnes per annum of ethane to secure the feedstock for OPaL, from May 2028 onwards.
And to ship this ethane, it has formed a joint venture with Mitsui to build VLECs that could ship the feedstock.
ONGC will be responsible for sourcing ethane. It will hire the VLECs from the joint venture for the shipping of ethane.
ONGC built the C2/C3 extraction unit at Dahej in Bharuch district of Gujarat in 2008-09. However, its subsidiary OPaL could build the petrochemical plant only in 2017. It sold the C2-C3 compounds extracted from the imported LNG from Qatar, to Reliance Industries-owned IPCL till its plant to convert them into polymers came up.
C2-C3 plant has a handling capacity of 4.9 million tonnes per annum of LNG. OPaL plant comprises 1.1 million tonnes a year of ethylene capacity dual feed cracker, along with associated units and polymer plants, to manufacture HDPE, LLDPE, PP and Styrene Butadiene Rubber.