Date:02/07/2005 URL: http://www.thehindubusinessline.com/2005/07/02/stories/2005070203300100.htm

Back GAIL plans seven-fold rise in petrochem business — Mulls acquisition or equity participation

Richa Mishra

New Delhi , July 1

GAIL (India) Ltd is looking at various options, including acquisition or equity participation in an existing petrochemical plant in India or abroad, to capitalise on the growing demand for petrochemicals in the country (12 per cent) as well as globally.

"GAIL is planning a massive capacity expansion of its petrochemical production to over 2 million tonnes per annum - a seven-fold increase over its existing capacity," Mr Proshanto Banerjee, Chairman and Managing Director of GAIL, told Business Line.

The total investment in the petrochemical business is expected to be over Rs 13,000 crore, spread over a period of time, he added.

When asked to elaborate on its plans for acquisition or equity participation, the company said they were at a very preliminary stage. It was also actively considering a one million tonne per annum gas cracker in Iran in collaboration with National Petrochemical Company, Iran. The company plans to have a 50 per cent stake in the venture. The feedstock for the gas cracker will be ethane. A feasibility study is being carried out for the project, Mr Banerjee said.

The two other major petrochemical plants under various stages of planning/approval are the Assam Gas Cracker project and Kochi Petrochemical complex.

GAIL has been nominated to set up a grassroots gas cracker project in Assam, wherein an investment to the tune of Rs 5,200 crore is under consideration. The plant will have a production capacity of 2,80,000 tpa of polymers. The Government of Assam, Numaligarh Refineries Ltd and Oil India Ltd (OIL) are also expected to participate in the project.

The gas shall be supplied by OIL and ONGC, while naphtha would be sourced from Numaligarh Refinery Ltd. GAIL is also evaluating the option of setting up the petrochemical complex using the MTP (Methanol to Propylene) Technology of Lurgi, Germany, for conversion of abundant lean gas to polymers as opposed to rich gas, which is available in lesser quantities than lean gas, he explained.

Another integrated grassroots petrochemical plant is being planned at Kochi with a capacity of 7,00,000 tpa at an investment of Rs 7,000 crore. This ethane-propane (C2-C3) based petrochemical complex will produce 600,000 tpa of ethylene and 100,000 tpa of propylene.

The feedstock for this plant, will be imported LNG, which will be re-gassified at the terminal of Petronet LNG Ltd at Kochi.

GAIL proposes to enhance the production capacity of its petrochemical plant at Pata from 3,10,000 tpa.

"The de-bottlenecking of the Swing Plant at Pata at a cost of Rs 59 crore for increasing LLDPE production capacity from 160,000 tpa to 210,000 tpa has been completed.

"The Rs 647-crore petrochemical plant expansion project for increasing ethylene capacity from 3,00,000 tpa to 4,40,000 tpa with an additional cracking furnace and a new HDPE plant of 100,000 tpa capacity is underway," sources said.